An Ohio congressman, Warren Davidson, is planning discussions with some of the largest players in the cryptocurrency industry in September, with the focal point of debate expected to surround the regulation of initial coin offerings (ICOs) and the decision making of the Securities and Exchange Commission (SEC). Mr Davidson has invited delegates from 32 cryptonians, including Kraken, Ripple and NASDAQ, to Capitol Hill for a meeting scheduled for September 25.
At the time of writing, Davidson appears to be of the belief that cryptocurrencies as a whole are “risky and unsafe”, according to recent quotes from the man himself. Davidson appears keen to lead the charge for the legislation of ICOs in order to better protect consumers and appease national security concerns.
ICOs are doing very nicely at present, with the number of new crypto coins being released rising by the week thanks to the innovative business models that they are linked to. ICOs launched in June raised over $1.5 billion. There appears to be widespread agreement in the US that some form of light-touch regulation is necessary to regulate the launch of ICOs and provide an environment that enables consumers to invest in legitimate crypto initiatives. A self-regulatory organization could be the ideal solution to provide much-needed guidance in the industry.
There has also been speculation regarding the effectiveness of some of the SEC’s current requirements, which are viewed as inappropriate or outdated. More specifically, the legislation surrounding investment prohibitions which go against the requirements of business models that need these new tokens to be distributed as quickly as possible to interested parties. Davidson is a member of the subcommittee responsible for overseeing the work of the SEC and is clearly keen to get the views of the leading names in the crypto scene as the US government weighs up cryptocurrencies entering the mainstream.
Perhaps the number-one question from all of this is whether an ICO should be considered as a securiy offering. Recently, the SEC chairman, Jay Clayton has remarked that the primary purpose of an ICO is to provide liquidity to those interested in new digital services and to act as a primary marketing tool. Despite Clayton’s positivity and understanding of the concept of ICOs, the SEC’s commissioner, Hester Peirce, has refused to declare all ICOs as securities. This is because Peirce believes some crypto tokens have the ability to qualify as a security at some point and then transform into something else at a later date.
Nevertheless, the cryptocurrency industry will be heartened that ICOs are on the table as a topic of conversation within Congress. ICOs were first debated in Congress back in March, when a string of experts reiterated the need for clarity regarding their legality. Earlier this year, Coinbase chief legal and risk officer, Mike Lempres confirmed that the crypto exchange was holding back from supporting new ICOs due to the regulatory uncertainty. Lempres said that he and the company were “waiting for the dust to settle between the SEC and CFTC”. It is hoped Davidson will make the SEC’s position on ICOs clearer in the fall.
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