Initial Coin Offerings (ICOs) are still a very controversial aspect of the cryptocurrency market. Interestingly, ICOs are one of the main themes of this year’s Fintech Week conference at Georgetown University. Speaking at the event, William Hinman, a director at the SEC, said that the institution plans to offer guidance on ICOs.
In particular, Hinman is the Director of Division of Corporate Finance at the US SEC. The event was a joint collaboration between Georgetown University’s Institute of International Economic Law and the IMF. Traditionally, the event brings together finance industry players from both the market and the government.
Plain English Guidance
Speaking at the event, Hinman acknowledged that there is a lot of confusion surrounding ICOs. In a sense, this is one reason why the take up of digital assets is low. Also, the confusion has given bad actors the leeway to defraud unsuspecting investors.
Therefore, the SEC plans to offer “Plain English” guidance saying, “We’ll elaborate on that in a very plain English way, so ‘do I think I have a security offering,’ look at that guidance and you should be able to sort things out.”
Given that, the SEC director details that the guidance will focus on clarifying the ICO projects in the market. Further, the clarification will avail important data that will help developers decide if a token is a security or not. In essence, the guidelines will benefit both the creators and the consumers of digital products in the cryptocurrency ecosystem.
SEC Plans to Offer Guidance on ICOs against the FY 2018 Report
Most importantly, the guidelines will enable exchanges to decide on the nature of a token even before launching it on their platform. Per Hinman, exchanges will be able to establish which tokens they cannot offer on their platform. In particular, the issues under scrutiny by the SEC are accounting, evaluation of the tokens, and even custody.
Ultimately, the aim is to bring transparency in the sector that thrives on privacy. Hinman added, “I think we can try to bring that together and share that … we want to share that a little bit more transparently.”
Interestingly, the comments come in the background of the SEC’s annual report for the FY 2018. In the report, the SEC states that the rise of ICO misconduct led to increased investigations of digital assets. In particular, the report establishes that, “issuers may not have established track records, viable products, business models and the ability to keep digital assets safe from being stolen by hackers as potential dangers.”
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