A number of startups conducting ICOs in the US have recently been affected by the SEC’s decision to make them more compliant with its regulations. And though some of them have been able to get around that predicament by paying a substantial fine or discreetly refunding their investors, others (less fortunate ones) claim that they have received no prior warning as to what the financial regulator required them to do and how they could meet those requirements.
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Launching an ICO in the US is becoming increasingly popular with blockchain startups in that country. Unlike traditional investment schemes, it provides them with a relatively quick and easy way of making money.
They resort to selling digital tokens as a means of funding their ICOs in the US. It often happens that businesses running ICO funding in America do not have any product at all, nor can they provide any information confirming the legitimacy of their ICO-funded startups.
Some of them tried giving their tokens all kinds of names (e.g. utility ones), but that did not make any noticeable impact on the SEC which preferred to handle each of their cases on an individual basis.
In addition to that, the financial regulator identified each and every of their offerings as securities, thus causing anyone wishing to raise funds by means of an ICO in North America to abide by respective federal legislation.
Any startup planning on issuing a security in the US, which includes selling it to both US and non-US investors or properly certified investors with a yearly income of more than two hundred thousand dollars, is required to register it with the SEC.
However, in his statement issued last June, the SEC’s Head of Corporate Financing made it abundantly clear that ICOs are to be considered securities. However, he added that Bitcoin and Ether are the two cryptocurrencies that, in his view, cannot be deemed as such.
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