Decrypt media, in association with Yahoo Finance, have recently issued their market analytic report, which sheds light on ICOs and how companies struggle in their business in that, under tightened rules by the financial regulatory bodies.
The report raised awareness about “Concerns over the legality of token sales have had a chilling effect,”, describing the regulatory atmosphere of ICOs to be “uncertain”.
News resources reported last September that a court in New York ruled that ICOs involve the selling of securities and are covered by U.S. Securities and Exchange Commission (SEC) rules. However, the details for compliance remain over these firms’ heads.
Having subpoenaed more companies so far, SEC was referred to in the report as leaving startups in the dark. “Many startups that have been subpoenaed say they are left in the dark struggling to satisfy the SEC’s demands, and are uncertain of how others are handling it,” the report read.
Signs of No More Restrictions
As per Decrypt, the SEC already looks at ICO products as securities, and might not issue further blockchain-related regulations.
“There’s even a lack of clarity around whether there is a lack of regulatory clarity.”, added Decrypt in its joint report with Yahoo Finance.
In his turn, Robert Cohen- SEC Chief of Enforcement Division Cyber Unit stated “Some companies tell us the name of the law firm that advised them, explain the know-your-customer procedures they followed, and show us an investor list that is limited to accredited investors. At the other end of the spectrum, some point to a website statement about limiting the ICO to some investors, and possibly checkboxes, and that’s it.”
To avoid further legal complications and costs- as per the report, many companies called on by the SEC are simply refunding customers.
However, those who have already issued their tokens are not able to simply refund the money.
Jony Levin - Chainalysis CEO, said in his turn,“In a lot of cases people bought tokens in ICOs through exchange accounts at places like Kraken. So you can’t just send tokens back to the address you got them from, because that’s an exchange address. If ICOs are made to refund buyers, it will have to be similar to the Mt. Gox case: you make a public announcement and people have to prove they were a contributor.”
It is worth mentioning that the Decrypt Media-Yahoo Finance investigatory report, depended on interviews “with more than 15 industry sources,” many of whom requested anonymity.