In their brief history, cryptocurrencies have had much influence on the financial sector of the world at large. There is a lot of money changing hands as people buy or sell digital tokens. The advent of the Initial Coin Offering introduced a new energy that has fuelled a euphoria of digital tokens to new heights. Every other day sees a new request for an ICO by different entities. The bulk of this business is happening in the United States, where the most energy for blockchain technology is found.
Securities or simply digital assets?
Initially, the focus of the US Securities and Exchange Commission (SEC) has been on the digital coins and their developers and how they interact in the cryptocurrency market. However, given the large volumes in which the tokens are being traded and the total worth in billions of dollars, the focus has shifted to those entities that provide the trading platform.
The commission has sought to include digital assets in the realm of securities since the manner in which they are traded resembles that of securities. The trading companies seem to operate just like the entities that are involved in the brokering of stocks and securities. Therefore, the argument is that these companies register with the SEC and change their status to securities exchange companies.
Transparency and full disclosure
The crypto market has grown into a full-fledged exchange market in which serious investors who are after huge returns have poured their money. Therefore, it is incumbent on the companies that issue ICOs to fully disclose the nature of the securities they are trading; whether they are registered or not. Recently, there have been numerous reports of investors who filed class action suits against crypto companies who flouted laws that govern the securities market. This is an important case of investors flexing their muscle as they work hard to hedge their bets on the market. Therefore, as the rules change and as the digital assets change their identity in the eyes of the law, it is important for companies that issue ICOs to go the extra mile in their relationship with their investors since the market place is now more formal than ever.
