The cryptocurrency market has experienced tremendous growth this year, reaching a total market cap of more than 150 billion dollars. This explosive growth has captured the attention of governments and regulatory agencies around the globe.
Until recently, there was very little interest from governments in cryptocurrency, however with ICOs raising millions of dollars in mere minutes, they have been forced to take notice. Up until this point the cryptocurrency markets and ICOs have operated virtually free from regulation, however that is all about to change.
SEC Tokens Ruling
On July 25th, the SEC made a ruling on the DAO token sale concluding “that tokens offered and sold by a "virtual" organization known as "The DAO" were securities and therefore subject to the federal securities laws.” DAO is a decentralized autonomous organization, a new business model that doesn’t require a CEO or centralized hierarchy.
In this ruling, the SEC made it abundantly clear that “U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations”. The SEC’s ruling was a warning for the entire industry, designed “to caution the industry and market participants: the federal securities laws apply to those who offer and sell securities in the United States, regardless whether the issuing entity is a traditional company or a decentralized autonomous organization, regardless whether those securities are purchased using U.S. dollars or virtual currencies, and regardless whether they are distributed in certificated form or through distributed ledger technology.”
ICOs Delaying Crowd Sales
Several ICOs have already delayed their crowd sales because of conflicts with securities laws. The United States is not the only country getting involved. This week, Chinese regulators released a document which in effect has banned new projects that raise cash or other vir...