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The US Securities and Exchange Commission (SEC) continues to take a close look at the current ICO uncontrolled growth in the cryptoscene and is looking for a way to regulate young startup investments.

With the increase in ICO crowdfunding projects, more and more blockchain experts are concerned that the lack of transparency regarding the issuance of such tokens could pose risks to investors. Reason enough for government regulators to address the issue and look for possible ways to regulate and protect investors. A few days ago, the SEC announced that the ICO Token Sales were at the top of the regulator’s radar.

According to Reuters, the Securities and Exchange Commission is now keeping a watchful eye on the sharp rise in ICOs over the past few weeks.

Due to the virtual and decentralized nature of ICOs, such projects can easily be used for money laundering. This is also a good reason for the SEC to take a closer look at the current situation.

A challenge for the regulators of the Bitcoin secret

The problem for the Bitcoin secret regulators lies in particular in the business field in which the blockchain start-ups operate like this: In a decentralized ecosystem, there is usually no single instance that can be held responsible for the token sale or for the legally compliant output of the tokens. Regulators can currently only use third parties such as wallet providers or Bitcoin exchanges.

SEC is not sure how to handle blockchain and ICOs.
Although the Securities Act of 1933 and the Securities Exchange Act of 1934 broadly define the scope of all „securities“ such as stocks, bonds, futures, swaps, investment contracts and more, there are no regulatory guidelines on how to treat Bitcoin or Blockchain. Therefore, the SEC has decided that companies using blockchain technology to transfer securities must register as stock exchanges or brokers.

Therefore, any blockchain platform that brings buyers and sellers together and exchanges digital assets defined as securities could be required to register.

Fraud & Scam vs. Great Opportunity for Young Cryptosoft Startups

As you can see, it is probably only a matter of time before government agencies like the SEC take the first steps towards regulating cryptosoft ICO token sales. On the one hand, this would help to protect investors who invest arbitrarily in projects that later turn out to be fraud; on the other hand, regulation would probably close the doors to financing for many young block-chain start-ups and nip them in the bud.