ICOs with Similar Structure as DAO Need to Be Compliant
Some welcome the ruling, while others are still on the fence on how this affects the future of ICOs.
Several leaders of companies involved in Blockchain technologies have voiced out their opinions on the ruling issued by the US Securities and Exchange Commission (SEC) in mid-2017 regarding the so-called initial coin offerings (ICO).
Based on the ruling, some digital currency ICOs can be considered as securities and should be subjected to existing regulations. Some welcome the ruling, while others are still on the fence on how this affects the future of ICOs.
According to Ari Mellich, Decentraland Project Lead, the SEC decision has no significant effect in the cryptocurrency market in general.
“The SEC weighing in represents public acceptance of Blockchain instruments. They said that the DAO tokens were a security and that all securities must be registered according to the law. The market was anticipating this, and the price of non-security tokens, like Ethereum, did not fluctuate when the SEC report came out.”
Arnold Spencer, Coinsource General Counsel, meanwhile, said that the decision will result in significant fallout for the firms which conducted ICOs that were structured similarly to the DAO in the past six months.
“Many ICOs are out there that will now be viewed definitively as securities, and yet are unregistered. These companies will now need to register as securities, an expensive process that they may or may not be able to pay for, or they will risk being on the wrong end of an enforcement action.”
Future ICOs should be subjected to securities law
In its report, the SEC said that all previous, current and future ICOs should be subjected to securities laws.
The US governing body also cited as an example the case of the DAO ICO, claiming that the DAO team has violated the laws when it launched the ICO.
The DAO ICO, however, was very successful and it has established in some way industry standards for future ICOs.
With these developments, it is very interesting to see how this ruling will affect the markets in the coming months.