The SEC is at it again, regulating initial coin offerings (ICOs) as if they were securities, according to the Distributed Ledger.
The Ledger provides an explanatory article, one telling us how lawyers explain the situation. But there really is no explanation.
ICOs don’t as a matter of course offer equity in a company. They are currencies, not stocks. They may reflect a corporation’s value, but not directly,
The SEC doesn’t seem to care. It wants to “dialogue” on the matter but the dialogue will take place within the parameters the SEC has laid out.
The SEC is simply superimposing securities law onto ICOs. The larger issue is that the SEC’s regulation is superimposed on top of the regulation that the market itself has provided.
“The U.S. Securities and Exchange Commission (SEC) issued an investigative report today cautioning market participants that offers and sales of digital assets by ‘virtual’ organizations are subject to the requirements of the federal securities laws,” a recent SEC press release explained.
What’s going on is that the SEC has simply decided to regulate rather than build a new regulatory code from scratch. This may be simpler, but that doesn’t make it correct.
ICOs may be headed for a massive die off, but that doesn’t mean the SEC ought to protect market participants. The real problem with markets is central banks. People are so desperate to get away from government money that they will buy anything, even speculative ICO investments.
Get rid of manipulative central banks, not ICOs. Then these massive waves of hyped investments will die of their own accord. Of course, when it comes to ICOs,. some will survive, as they should – just as some websites survived after the dot.com bust. The ones that survive will be the best run and best managed.
But the SEC is part of a central bank conglomerate, that regularly causes the rise in speculations. It is promoting the very problem it then wants to cure. When you get rid of central banking, you can also get rid of Washington’s regulatory apparatus. We won’t hold our breath.