The SEC is on an active quest to remove all illicit offerings from the cryptocurrency ecosystem. That is quite a steep challenge, as there are a lot of things to take into consideration. The commission’s latest effort involves issuing dozens of subpoenas to ICO issuers.
The SEC Steps up its Game
Most people will be pleased to see the SEC take this course of action. There is nothing wrong with what the agency is doing as of right now, even though those who are involved in the ICO industry will not be too pleased with the way things are going. It has become very clear that the government agency is concerned with initial coin offerings and the potentially illegal aspects of some of these projects.
Over the past few months, we have seen the SEC go after potentially illicit ICO offerings. As such, the trading of specific tokens and company shares has been suspended, although it is possible some of those offerings will come back at some point. However, it does not end there for most of the ICO projects, as the next step has already been taken.
To be more specific, the SEC is now issuing subpoenas to virtually anyone involved in issuing ICOs. This means they will not only go after the centralized platforms designed to issue these tokens, but potentially also the trading platforms where these ICO tokens are traded. The goal is to make ICO issuers and facilitators adhere to the same compliance guidelines as traditional securities issuers. Whether or not that is a realistic goal is yet to be determined.
It is evident the securities industry is incapable of dealing with ICO tokens as of right now. More specifically, its infrastructure is not fully compatible with this new token type, and it creates a lot of potential compliance issues. As long as this remains a problem, the ICO industry will not gain any major traction in the US or potentially anywhere else in the world. It’s a very worrisome situation, but it seems the SEC is being proactive about solving all of these problems in the future.
Although issuing subpoenas may be considered a rather severe course of action, it is also necessary, according to the SEC. It wants to further crack down on any companies violating securities laws. For now, it remains unclear which companies or entities have actually received such a subpoena over the past few days, but it seems there are quite a few of them. Getting rid of the illicit elements which promote the ICO model for a business that doesn’t exist is a positive development.
Until ICO issuers register with the SEC, this crackdown will undoubtedly continue. Since most of these tokens also trade on secondary markets that are outside the purview of the SEC, it will be quite interesting to watch how widely this “spree” of subpoenas can reach. It is evident that ICO issuers will need to step up their game and register with the SEC. So far, the entire industry seems a bit slow on the uptake in this regard.
It will also be interesting to see what the future holds for the ICO industry as a whole. Regulatory action against this business model is a positive decision overall, even though it may cause some short-term friction. Whether or not any further legal action will be taken remains to be seen. Anything is possible right now, and it depends on what information the SEC uncovers in the next few days and weeks.
