CoinList founder and President Andy Bromberg has finally answered why his ICO services firm has only been associated with five out of the 2,500 token projects. He was a guest speaker at Unconfirmed podcast hosted by Laura Shin on July 27, 2018. He highlighted the problems faced by the cryptocurrency industry due to a lack of regulatory framework.
The ICO landscape
Several projects applied for ICO in 2017 and early 2018. These projects raised investor capital at astronomical valuations. The SEC was concerned about small investors losing all their savings by investing in an high risk ICO. This was followed by the SEC keeping a close vigil on certain ICOs and even shutting down a few fake ones. Andy said that the ICO industry has now matured from its early days. He stated that not all projects that undergo an ICO may be fake but some of them just do not represent any real utility. He cites this as the main reason why CoinList has only worked with five projects.
Cryptocurrency Industry Faces Regulatory Hurdle
He also gave his thoughts about SEC considering to label cryptocurrency tokens as securities and how this would affect the ICO landscape. “When we got started a year ago, we believed and have just seen increasing evidence over the past year that this idea where you can sell something as a token or as an instrument that represents future ownership is a security under relevant security laws of whatever jurisdiction you are selling,” said Andy Bromberg. He cited a SEC statement where it was said that Ethereum can not be considered as a security. It must be remembered that Ethereum also had an ICO. The US Agriculture Committee also held a public hearing to classify whether digital tokens must be considered as securities or commodities. Committee chairman Mike Conaway stated that these digital tokens would fall under the purview of the committee if they were to be classified as commodities.
Security or Commodity?
There is a need for regulators to clarify whether digital tokens would be considered as security or commodity because then it would become easier for the government, regulators and ICO projects to work accordingly. Andy said that many companies are coming to him and asking if their tokens will become non security at a later stage. There seems to be no clarity whether this can be done or how such a conversion from a security token to a non security token will take place.
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