SEC & Initial Coin Offerings (ICOs)

Should the Securities and Exchange Commission crack down on Initial Coin Offerings? According to a former commissioner at the S.E.C., Joseph Grundfest, the answer is “absolutely."  Billions have already been raised over the past few years by start-ups in exchange for virtual currencies.

In July of 2017, the S.E.C. advised that these coins could be considered securities, which would bring them under the S.E.C.’s regulatory purview. Mr. Grundfest opines that the easiest way for the S.E.C. to initiate an enforcement action against a company offering virtual currency is to classify the currency as a security and then cite the issuer for not registering with the agency.  Take note – I.C.O.'s are in the regulatory cross-hairs, and issuers should carefully analyze and comply with regulations applicable to their offerings.