In an announcement made yesterday, SEC decided that all assets sold through ICOs are securities. Hence, they have to be regulated. In other words, the blockchain just got in the hands of the State.
The implications are huge. Oh, scratch that. The implications are historical (a look at the markets should confirm that).
Just last week I was writing that we are in the Wild Wild West era of the cryptocurrencies. Seems like that era just ended.
As in every other event in our life, there are many faces to it, nothing is completely good, or completely bad. This ruling too has a few interesting corners. So, as they say, let's see the good, the bad and the ugly.
The Good
It will be more difficult to scam genuine people interested in cryptos. The abundance of ICOs of the last few months brought to the shore a few very questionable ones. The fact that every emission of tokens in an ICO is now regulated will probably blast away more than half of those and will slow down the number of potential ones significantly.
The Bad
Since the number of ICOs will decrease, the dynamic of the market will go down significantly. In startup terms, "time to market" will become an order of magnitude longer. That will also slow down innovation and, overall, will make the entire ecosystem a bit duller. After an initial period of clarification, we will probably see this in the trading variations too: 10-20% day to day will be thing of the past.
The Ugly
What once was a distinctive sign of freedom, a longing for a better, decentralized world, without the ever pressuring presence of the almighty state, is now a thing of the past. The weirdos, the misfits, the crazy ones of the blockchain are gone. I used to say many times that Bitcoin, as a business, will be very similar to Napster. Do you still remember Napster? It was the first torrent service ever and it went down in flames. There was even this saying on the Internet: "go Napster: destroy to create!". Well, Napster certainly destroyed itself but the technology remained. I'm afraid we will see this with Bitcoin as well. It may be the price to be paid in order to have not one predominant currency, but a plethora of decentralized, ledger-based ecosystems, just like, today, torrents are an ubiquitous, silent presence.
Time will tell.
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Don't see how it affects the rest of the world?!! ICOs just need to state in their terms that u.s. Citizens can't buy into their ico, just like eos.
So that was the real reason why the town is now painted red! I was thinking the recent BTC drop was because of the BCC issue. Due to ICOs ETH may be the biggest affected as it's the gateway for ICOs
Yes, but it also casts a shadow over EOS, which wants to play on the same "smart contracts" field as Ethereum.
Exactly! I was supposed to buy a couple of bucks of EOS this payday but decided to hold out. EOS doesnt have much support aside from the $1.20ish if it goes further down who knows how low the price of EOS could do. I'm a long term holder but these events likely pushes back EOS support in the short and mid term.
Thank you for the link. Can this be the end of the bull run? Are we in for another year of consolidation perhaps?
Time will tell.
Regulation is good to some extent, governments should not look for their own benefit and fraudsters will stop issuing crap ICO any further. Thanks @dragosroua for sharing the important updates.
Could companies simply look to avoid offering their ICO in the US?
From memory, EOS took this approach with their ICO, could others follow?
Thats the new norm, then you still have americans buying the ICO's either marked up on the exchange markets even though they can't get the ICO's directly.
Doesn't it also bring issues for the exchanges though? If the tokens are classed as securities then the exchanges will have to comply with US securities rules. Potentially could they require more disclosure from coin issuers to allow their coins / tokens to continue to be traded?
Ugh. I'm worried about the tax implications of this. The fact that I enjoy trading stocks and did so pretty frequently the past few years made my already horrendous tax reporting burden even more miserable. Now that the SEC is getting involved in regulating crypto market, it's gonna get more complicated and I foresee a nightmarish tax filing burden in the years to come for people trading and even just investing in crypto currency. I always do my own taxes and it usually takes me about 8-12 hours to prepare my return electronically and now it's only gonna get worse as I trade crypto currency a little bit now and am planning to hold some of them for a long time. Determining profit from trades as valuations fluctuate so wildly is gonna be difficult as the reporting burden will inevitably fall on the user and I doubt reporting will be as streamlined as it is for stocks since crypto is so new and the exchanges probably will struggle to make it easy on the user to download their trades in TXF format to turbo tax or whatever for the first few years like you can with a normal stock broker. This means one will have to manually calculate short and long term gains which is a true pain in the ass.
Yeah the Republicans say they want tax reform but they haven't done jack sh*t about anything even though they have the presidency and both houses of congress. SO I have very little faith they'll do anything to ease our already crushing tax burden. They're gonna regulate the crap out of crypto currency and tax people to death is what I'm afraid of.
The silver lining is it could create a good buying opportunity if new coins drop in price in reaction to the news.
The government ruins everything. One of my long term goals is to get out of this crony capitalist police state and the SEC announcement just gave me one more good reason to want to leave. :(
Thank you for sharing this even if it is not good news. It's important
At least it will prevent fraudulent activities as well as scams but the bad thing is, this is just one step forwards towards the state trying to regulate and moderate cryptocurrency.
Let's hope crypto can stay decentralised and a platform where anyone can use it throughout the world with no precautions or anything prohibiting them accessing the cryptospace.
Im newbies in cryptocurrency and ICO , thank you so much for this great post ,
and thanks for your amazing support by steem.supply , its my best tool in steemit
glad it's useful :)
Very Helpful , thank you so much
It's not good for the cryptoworld but I guess it can reduce the amount of scammers out there. Also some people who would follow those scammers might otherwise invest in other projects, more reliable.
Not sure how much that will change really. Remember the discussion about EOS not offering their coins to be bought in the US? Well, that's the reason. The SEC can only rule for US ground. Only because it got a bit more difficult to offer coins in the US does not mean there will be less fraudulent ICOs or it got any bit more safe to participate in an ICO. When the ICO issuing party is in Shanghai, what do they care about US regulation? They just write "US citizens please don't buy" and we have the same old...
Yep, not only Shanghai, but also Zug (Switzerland), Singapore. There will be workarounds, for sure. But time to market will still be slower and a lot of money is still in US, so liquidity may be lower.
It had to happen. The ogre wants his share. Always. I was naive enough to believe it would take longer.
The point is: is there a way to avoid this regulation? A way to stay out of the radar? I had the idea that was the whole point of cryptos and blockchain and all: to keep Leviatan away.
Great comparison with the torrent ecosystem.
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