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SEC Rules That ICO Tokens Are Securities (vice.com) 96

schwit1 shares a report from Business Insider: On Tuesday, the Securities and Exchange Commission (SEC) said that "ICOs" (Initial Coin Offerings) can sometimes be considered securities -- and as such are subject to strict laws and regulations. For the uninitiated, ICOs are a fancy new way of fundraising enabled by digital currencies like Ethereum -- participants invest money and receive digital "tokens" in return. Thus far, it has been largely unregulated, with some ICO crowdfunding events raising hundreds of millions of dollars -- leading some observers to argue that it is a massive bubble. But the SEC's warning means that this free-for-all may not last forever.

"Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission," reports Motherboard. "This will force companies to comply with regulations that ask them to reveal their financial position and the identities of their management. The SEC also concluded that online exchanges where tokens are bought and traded may have to register as security exchanges."

schwit1 adds a quote from Benito Mussolini: "All within the state, nothing outside the state, nothing against the state."

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SEC Rules That ICO Tokens Are Securities

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  • Overseas (Score:4, Interesting)

    by dohzer ( 867770 ) on Wednesday July 26, 2017 @07:47PM (#54887847) Homepage

    So launch them overseas. Problem solved.

  • This is healthy (Score:5, Insightful)

    by Improv ( 2467 ) <pgunn01@gmail.com> on Wednesday July 26, 2017 @07:50PM (#54887865) Homepage Journal

    I have little sympathy for technolibertarians playing word games to dance around sensible regulation. Particularly when they grumble that sensible regulation is fascism.

    • Re: (Score:1, Offtopic)

      I have little sympathy for technolibertarians playing word games to dance around sensible regulation. Particularly when they grumble that sensible regulation is fascism.

      So you believe that small investors should never be allowed to invest in a company by mutually agreeable terms with the company, without some parental agency dictating the rules and thereby precluding their consensual activities?

      Only rich folks should get to do that?

      It's hard to tell "smarter than you" from "you're too poor for equal rights"

      • by Improv ( 2467 )

        The rights I care about are very differently flavoured than "opportunity to invest in a company", but yes. I think it makes sense to block people off from entirely screwing themselves over, and if that means less well-off people (often meaning people with no background in investment) can't invest this way, that's great.

        • by Zemran ( 3101 )
          "entirely screwing themselves over" like people who invested in Bitcoin a few years back when they were $1 and now have something worth $1600... I wish I got screwed over like that. It does not matter. Such regulation is totally unenforceable and therefore totally stupid. More sensible governments are embracing such things and US people are totally welcome to invest in other countries under their laws. All this does is cut the US out of a growing sector.
          • by Anonymous Coward

            No, screwed over like "attended ITT Tech".

          • by Improv ( 2467 )

            It's easy to praise this when investments go well. But were you to actually treat this thoughtfully and consider the actual "screw yourself over" case, you might reach a different conclusion.

      • Well, when the rules that they're dictating are related to being honest about investment, then that is called "Capitalism." It is the very action of the government regulating trust to create a level playing field that allows capital to move freely. Without that regulated trust, established parties or the party controlling the information will conspire to keep new entrants out of the market. That is what Capitalism is all about. Read some Adam Smith sometime.

    • by hord ( 5016115 )

      Having an office filled with porn addicts isn't paradise either. People keep barking regulation but it also keeps failing us.

    • I have little sympathy for technolibertarians playing word games to dance around sensible regulation. Particularly when they grumble that sensible regulation is fascism.

      I know, they're so shocked that they're supposed to be honest about investments that they sell to people. How dare we not be allowed to lie about how much money people will make by giving their money to us?!

      They don't seem to understand that creating a "new" equivalent thing that is also being marketed for the purposes of investment is already some type of investment instrument. They were playing a word game, but they were doing something regulated all along.

    • Hahahaha!! Buddy, the US is already 20 TRILLION in debt. Other nations are going cashless and clamping down on how much money you can move around. Nation states, around the world - especially the US - fear that the US dollar won't just go into hyperinflation, but as a standard be abandoned all together like a used husk. Crypto currencies would be a money system without borders, much like the Internet. That freaks the fuck out of governments all over as it robs them of political power to oppress their consti

      • the US is already 20 TRILLION in debt

        That number includes debt owed by the federal government to itself. The bad day for the US is not when we have lots of outstanding debt, but when no one wants it any more. The actual $13.62T of debt is an enormous bet that the US will remain solvent. No informed persons worry about hyperinflation, and the topic of public debt is not particularly relevant. The SEC is attempting to regulate ICO tokens as investment vehicles because people keep trying to use them as such. There is zero reason to believe in the

  • by Frank Burly ( 4247955 ) on Wednesday July 26, 2017 @07:58PM (#54887913)
    The actual statement by the SEC is here: https://www.sec.gov/litigation... [sec.gov].

    It looks like people are investing money to obtain an interest in an item with no practical use other than as an investment

    I am reminded of https://xkcd.com/1494/ [xkcd.com]

  • >> "Going forward, according to the SEC, companies that are issuing tokens as part of an ICO (if they are considered securities) need to register with the commission..."

    I hope they realize that almost a thousand different cryptocurrencies already exist:
    https://en.wikipedia.org/wiki/List_of_cryptocurrencies
    • They can start arresting them one by one, and the cows will all return. No cow wants to be made an example of.
  • by ClickOnThis ( 137803 ) on Wednesday July 26, 2017 @08:07PM (#54887971) Journal

    I understand that many advocates of digital currencies sing the praises of their libertarian, state-independent qualities.

    But conflating the SEC with Mussolini? Come on, the purpose of the SEC is to protect investors from unscrupulous companies. Do you really want the kinds of markets we had before the SEC was around?

    • by fred911 ( 83970 )

      ". Do you really want the kinds of markets we had before the SEC was around?"

        No, but I do want the type of SEC that was in operation before the Clinton(s) were in office. You know the one that required transparent, orderly and fair markets for all buyers and sellers (not just for club members)?

    • by meglon ( 1001833 )
      Yeh, let the anti-government fucks lose all their money to one of these unregulated con-jobs, then see what they say. These idiots aren't libertarians... they're just idiots.
    • the purpose of the SEC is to protect investors from unscrupulous companies. Do you really want the kinds of markets we had before the SEC was around?

      It's irrelevant what the purpose of a law or agency. The only thing that matters is its effect.

      Yes, the markets functioned better before the SEC. The real intent of the SEC is to make sure you're not allowed to invest in competing financial instruments and to make investors completely and utterly gullible.

      • by AmiMoJo ( 196126 )

        Yes, the markets functioned better before the SEC.

        Yeah, 1928 was glorious. Maybe read the Pecora Commission's report on how awesome that time was for investors.

      • It's irrelevant what the purpose of a law or agency. The only thing that matters is its effect.

        The only thing that matters? Unlikely. But, um, okay...

        Yes, the markets functioned better before the SEC.

        FACEPALM. That is all.

        The real intent of the SEC is to make sure you're not allowed to invest in competing financial instruments and to make investors completely and utterly gullible.

        Wait ... didn't you just claim that an agency's purpose (i.e., intent) is "irrelevant?"

        The rest of your statement is hard to disentangle, but here goes.

        Unregulated financial instruments are a potential threat to the investing consumer, who must rely on the proper behavior of fiduciaries who are not compelled to behave transparently. Such instruments can "compete" just fine with regulated ones ... by becoming regulated. The effort

    • by NoMaster ( 142776 ) on Thursday July 27, 2017 @02:24AM (#54889261) Homepage Journal

      Not to mention the Mussolini quote dates from 1928 - a time when the USA didn't have a "rah rah democracy" foreign policy, fascism was considered a valid style of government and not a dirty word, and Coolidge, Hoover, and FDR were supportive of what they saw as a libertarian progressive Italian government that would resist Communism...

  • schwit1 adds a quote from Benito Mussolini:

    Thanks, I wasn't sure if I should be outraged or not: now I know. sharp intake of breath, with fear and outrage.

  • I predict a court challenge in 3, 2, 1... Seriously, Etherium, Bitcoin and the like are unique mathematical stores of value, more similar to that rare drop you got in your MMO than a security instrument.

    • Re:Court Challenge (Score:5, Interesting)

      by DerekLyons ( 302214 ) <fairwaterNO@SPAMgmail.com> on Thursday July 27, 2017 @01:45AM (#54889145) Homepage

      Seriously, Etherium, Bitcoin and the like are unique mathematical stores of value, more similar to that rare drop you got in your MMO than a security instrument.

      It's funny... all the alt.currency advocates were all about how "cryptocurrency is real money" - until the government started actually treating them as real money. Now they're backpedaling.

      • Re:Court Challenge (Score:5, Insightful)

        by Interfacer ( 560564 ) on Thursday July 27, 2017 @02:04AM (#54889215)

        If I hadn't already posted I'd have modded you up. Either it is money or it is glorified pokemon cards. You can't have it both ways. Tbh I think it is good if it's going to be treated like money. I'd love for institutional money to flood in. Especially since I am already holding coin.

        • Either it is money or it is glorified pokemon cards. You can't have it both ways.

          Yes, yes you can have it both ways, or rather it can be both ways depending on what the overall market says it is. One day your crypto-coin is worth value, another it can be halved or buried into a worthless group of numbers as the standard is abandoned.

        • Either it is money or it is glorified pokemon cards. You can't have it both ways.

          I've pointed that out many times over the years... it's a deep flaw in the basic philosophy of crypto-currency - they want it both ways. They want legitimacy, *and* they want complete freedom with no controls or regulation. They don't grasp that the latter is a necessary consequence of the former.

          • Either it is money or it is glorified pokemon cards. You can't have it both ways.

            I've pointed that out many times over the years... it's a deep flaw in the basic philosophy of crypto-currency - they want it both ways. They want legitimacy, *and* they want complete freedom with no controls or regulation. They don't grasp that the latter is a necessary consequence of the former.

            Some probably do want exactly what you say. Others recognize that as a financial instrument regulation is inevitable, but still see value because although it's subject to regulation, the supply of a cryptocurrency doesn't have to be subject to any central control, unlike fiat currencies.

      • by Anonymous Coward

        i don't care about governments too much, they have already peaked anyway. bitcoin is decentralized, no money grabbing ICO and fair distribution. works with or without government support.

      • by mysidia ( 191772 )

        Now they're backpedaling.

        Not really... it's "Real money" in the sense that you can reliably transact with it.

        It's not "Real money" in the sense that it is not a government-issued currency.
        Unlike real money, the government didn't make it and retain the rights to it --- so it's "More real" than money in the sense that it is more like tangible property with intrinsic value, and not something that can be arbitrarily manufactured.

  • An ICO is just a smart contract software as a service. The company running the SAAS pays taxes on the ICO, those who buy them treat it as a service expense. If they sell their tokens they pay tax on the income.

    The Fed is completely over-thinking this.

You see but you do not observe. Sir Arthur Conan Doyle, in "The Memoirs of Sherlock Holmes"

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