SEC official: ICO guidance coming soon
The Securities and Exchange Commission (SEC) is making progress on its oversight of the cryptocurrency industry. The commission is preparing to introduce guidelines for crypto, including how they are classified and how initial coin offerings (ICO) must operate. The "plain English" guide will give entities much-needed information to ensure regulatory compliance, but the release date for the information has not yet been revealed.
According to Sec Director William Hinman, the framework will help developers create new projects, in particularly ICOs. He stated that it will provide definitions on what will make a project be classified as a security and should go a long way to helping the industry mature.
Hinman added, "We also will be putting out more guidance, the idea is a plain English instrument that people can look at and they'll bring together sort of my Howey-meets-Gary speech, and that analysis ... We'll elaborate on that in a very plain English way, so 'do I think I have a security offering,' look at that guidance and you should be able to sort things out."
The SEC is exploring issues such as custody, token valuation and accounting to create the guidance. It has taken feedback, suggestions and concerns from the community and formulated its framework around this input.
In regards to how the SEC determines if a token sale is a securities offering, Hinman offered, "If someone's offering an instrument for money or other consideration to a third party, and that third party expects the offerer to generate a return or so something that will increase the value of the coin or token or whatever they want to call it, and there's that expectation of return, we're generally going to see that as a securities offering."
The introduction of the guidance, while not conclusive, should go a long way to helping the crypto ecosystem stabilize. It will give legitimate companies the opportunity to offer their products in a regulated environment, while working to eliminate the scams and protect consumers.