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Case-Study: 4 Recent ICOs and the SEC

Initial coin offering is a cryptocurrency venture which is primarily used by the startups for bypassing the stringent process of raising capital required by the mainstream banks and venture capitalists.

In an ideal ICO campaign, a particular percentage of this cryptocurrency will be sold to the individuals who backed it, in exchange of a legal tender or other cryptocurrencies. In other words, when an individual offers some units of this cryptocurrency to the investors, they get crypto-tokens like Bitcoin or Ethereum in exchange of it. Initial coin offering campaigns have been on the rise since 2013 when it was used for funding the development of newer cryptocurrencies. In case of a demand, a pre-created crypto token can always be sold and traded on all the exchanges of cryptocurrencies.

With the massive success of Ethereum ICO is being used all the more for funding the development of similar crypto projects. In case you’re willing to know better about Ethereum ICO and their legal tidbits, here is a detailed insight on leading ICOs in the market

Filecoin

Filecoin is a new blockchain and like its contemporaries it promises to come up with new breakthroughs for its customers. The blockchain ensures that the data sent in by the customers is specifically stored in highly secure sectors. This is owing to the high-end encryption of the site. The platform also comes with a competitive storage market where the bids are both visible and fair for all customers. Once a customer chooses to use this blockchain, they get to avail the best prices and the most lucrative guarantees all way round. The storage offered by filecoin is also decentralized which means it requires proof for verifying storage and mining the blocks. But when it comes to the legal aspect, Filecoin has decided to follow an entirely different path from the other leading blockchain projects. The token sale of this blockchain will be hosted on the leading platform Coinlist. This is not only one of the most popular platform for transacting and mining in blockchain, but it is also one of the most popular startup incorporated by Angelist. The token sale offered by Filecoin will completely comply with the funding regulations issued by SEC. At the same time, it will also be completely available for the citizens of the US. However, despite complying with the SEC regulations, Coinlist reportedly permits only the verified investments from leading firms, banks and other individuals with high net worth.

Bancor

Bancor is another leading ICO in the blockchain market. It comes with flexible offerings and a novel protocol that lets the in-built price to be accessible and uses liquidity mechanism for the various tokens on the blockchains made on smart contract. The smart tokens usually control one or more of these tokens while keeping them in reserve. This again, allows the party to immediately buy or even liquidate their smart token in lieu of any of the additional tokens kept in reserve. This is directly done through the contract of smart token while following a consistently well-calculated price backed by a formula which is used for balancing the volumes of purchase and sale. When it comes to SEC regulations, it has been found that like Filecoin, Bancor too complies with all the relevant regulations required by the SEC. However, unlike Filecoin, Bancor does not come with any predefined regulation about who can invest in this blockchain. It is currently open to one and all and is also widely popular (owing to the fact that it almost raised one fifty million dollars in one week). In either case, the novel nature and the massive success of the ICO, has gained significant scrutiny from the SEC. However, as per reports, it is complying to all the set regulations required by the institution.

Tezos

Like its contemporaries, Filecoin and Bancor, Tezos is a leading decentralized and self governed unit of blockchain, which owing to its flexibility and massive popularity has ended up establishing a highly digital commonwealth. The blockchain facilitates every kind of formal verifications, which again is a technique designed to mathematically reveal the authenticity and the level of correctness of a specific code that governs the transactions and is meant for boosting the security of the most highly sensitive and financially stable smart contracts. Now, when it comes to the legal aspect, the SEC had already warned that the promoters of ICOs like Tezos have misappropriated the security laws by encourage the use of digital tokens in lieu of the virtual companies, instead of directly selling the traditional assets. As of now, it has been not yet know whether Tezos complies or will comply with the SEC regulations. The SEC, however has been completely direct about their endeavor and they have reportedly mentioned that the underlying method of these transactions issued by ICOs like Tezos will be taken into consideration. This means, even if the firm is not willing to comply, they might be forced to register their concerned tokens with the leading SECs in the long run.

Iconomi

On its official website, ICONOMI claims to be a leading platform for managing digital assets. It is one of the youngest players in the blockchain industry, who with their innovative technical services are giving everyone to manage and invest in the digital assets. Unlike Filecoin, which restricts investment to only a specific number of individuals, ICONOMI is allowing both experts as well as beginners to invest in the blockchain industry. The company claims to provide its users with the best experience backed by the simplest method for both participating and growing in a highly distributed economy. The ICO comes with an entirely new set of intuitive tools that are designed for individuals belonging to every skill level. Now, when it comes to the legal aspects, like Tezos, nothing much is known about ICONOMI’s compliance with SEC regulations. However, it is highly surmised that the ICO doesn’t comply with the regulations and being a relatively new player in the market, it is likely to not comply with these regulations anytime soon. However, despite the hostility from the relatively new ICOs, it is almost evident that the industry will only get big and gain more attention, if the SEC allows them to do so.

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