Regulatory Actions Toward ICOs So Far

In my first real post, I will go over what the regulations have done towards ICOs. Whether it is "good" or "bad", I will present the Facts, My Opinion and What It Means.

Facts:
To start off, let's have a break-down of major the recent highlights:

1. July 25, 2017: DAO tokens considered as securities by the US Securities and Exchange Commission (SEC). Several countries followed the SEC’s steps and announced that ICOs may be qualified to be regulated securities. List of the countries will be posted in a future blog.
2. December 4, 2017: SEC filed fraud charges against PlexCoin and froze its assets. December 8, 2017: Québec’s Autorité des Marchés Financiers (AMF) sentenced the founder to 2-months imprisonment and $110k fine. FYI - PlexCoin team has repeatedly violated past court orders by the AMF to cease soliciting to Quebec investors in July 2017.
3. December 11, 2017: Munchee ICO halted by the SEC one day after its sales because it’s considered as an “investment contract” and ultimately deemed to be securities. Funds raised were returned to investors.
4. December 1, 2017: The US Commodities Futures Trading Commission (CFTC) gives green light for trading bitcoin futures on the Chicago Mercantile Exchange Inc. (CME) and the CBOE Futures Exchange (CFE). Again, when the mother nation announces major regulation advancement, other countries will follow.
5. January 5, 2018: The Texas State Securities Board (TSSB) ordered to cancel BitConnect ICO scheduled to take place on the 10th of January. January 9, 2018: BitConnect received another cease-and-desist order by the North Carolina Securities Division as it did not register to sell securities in North Carolina.
6. January 9, 2018: The Securities Commission Malaysia (SC) puts CopyCash ICO to rest following its inquiry that revealed that CopyCash inherent characteristics that may contravene with securities laws.

In summary, 3 main events have been taking place. 1) Regulators say ICO may be regulated as securities 2) Some ICO being shut down as it may be qualified as securities 3) Bitcoin futures launch

My Opinion:
Being a professional in the compliance industry, I understand and support the reasons behind the actions taken by regulators. We want to protect consumers and fight bad people. As a consumer, I don’t want to be scammed by a random group of people claiming they are inventing a revolutionary product backed by a digital token. In the contrary, as a crypto believer, part of me wants this industry to be freed from the usual regulators because I know this industry is not a big fan of regulations. In addition, even if an ICO is sold as security, it may not attract the hype crowd that I personally like. Instead, can we create our own version of “regulations” with smart contract?

Remember: regulations will always try to tame the unleashed beast in cryptos.

What It Means:
For ICO issuers, evaluate the functionality of the token to determine whether it qualifies as a security. Seeking reputable lawyers is also a big plus.
For token traders and participants, remember to trade on your own risk! If the token has already been listed on a crypto exchange, it is likely that the token is not a security. Nonetheless, I wouldn’t be surprised if one day the exchange decides to take it down if regulators say so!