Initial coin offerings, or ICOs, have been closely watched by not only national-level securities regulators.
Just last month, the North American Securities Administrators Association (NASAA) – an organization composed of local, state and regionally based markets watchdogs in Canada, Mexico, and the United States – published its Enforcement Report for 2017. Within such report is a section on the blockchain use case.
First noting that NASAA members believe that trading around cryptocurrencies in general “is likely to pose a significant risk to investors,” the association indicates growing interest in ICOs, which can be utilized to bootstrap and fund new blockchain networks.
Specifically, the report states: “cryptocurrencies purport to store value in a distributed digital ledger, and are currently very popular as a means of raising capital for very early stage startups (usually referred to as an ‘initial coin offering” or ICO). NASAA members are closely watching this emerging market.”
More interestingly, such statement speaks to a growing number of pronouncements from securities regulators worldwide, where in certain cases, cryptographic tokens distributed through an ICO may be considered securities under federal law.
But the case doesn’t seem as optimal in Asia, where regulators in China and South Korea declare that the ICO funding model is an illegal form of financing, triggering a wave of platform closures and refunds for projects that were in the middle of soliciting funds.
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