The SEC has demonstrated its ability to flex its muscles on a few unwilling and unregulated token issuers and an unregistered exchange.
The two token issuers, Airfox and Paragon, found themselves trapped in a lawsuit corral from the SEC not to long ago. The reason for their wrangilin? Both of them failed to register their tokens as securities with the SEC. Their other crimes? Nothing. Neither Airfox nor Paragon exhibited any worrisome or fraudulent activity that would otherwise attract the SEC’s attention. The lawsuits of Airfox and Paragon both resulted in the return of the security funding to investors.
Due to recent regulations, all ICO’s and exchanges are now required to register with the SEC. EtherDelta, a crypto exchange platform, reportedly knowingly did not register with the SEC in attempts to avoid regulation. The SEC’s pursuit of EtherDelta is the first occurrence of the SEC going after an exchange rather than an ICO.
The SEC’s recent lawsuits appear to be statements to the public rather than just individual lawsuits. It also indicates that the SEC may be more interested in targeting exchanges rather than ICO’s when it comes to cracking down on regulation.
Is the SEC trying to Destroy ICO’s and Crypto?
The answer to the above question is really a matter of opinion and speculation. Some dramatists would declare that the SEC is the evil of the crypto world and aims to round up all ICO’s and eliminate them one by one.
While the SEC is establishing heavy regulations and flexing their muscles on uncooperative parties, their intentions may not be as negative as they seem.
The SEC has been viewed as the enemy of ICO’s since the dawn of their creation. Many believe that the regulations the SEC places upon ICO’s completely destroys the point of them entirely. ICO’s are designed to be a way of crowdfunding for start-up blockchain companies that have little to no money to fund their project. Increasing regulations from the SEC continues to make it harder and harder to register and run a legal and successful ICO. But it may not be as negative as you think.
From a non-radical standpoint, the SEC is just trying to regulate a relatively new way of funding, whilst protecting investors from fraudulent ICO’s.
Think of the round up of ICO’s like a round up of cattle. The cattle are then branded as ‘SEC approved’ and released back into pasture to roam free.
The SEC is not the enemy, it’s just trying to eliminate those who makes it look like they are.
The SEC isn’t the problem, but it’s also not the solution.
ICO’s and cryptocurrencies in general were designed to be a decentralized asset; a medium of exchange free from regulation. These are the pipe dreams that were the foundations for all major cryptos and ICO’s.
If these aspirations and goals for ICO’s and cryptos may seem too good to be true… they are.
There’s always that one guy in the room who takes your promise for a good idea and a better world, and twists it. As soon as cryptocurrencies sprung into existence, so did its scams. The idea behind cryptocurrency was to create a borderless currency that could be exchanged instantly and without the need for any form of trust between the two parties.
The idea for ONE borderless currency has long since died as more than 2,000+ cryptos are currently listed. Now it could be understood why we would need more than one international crypto, maybe 10 or 100 max, but 2,000+ seems like far to many.
And of that 2,000 nearly 95% of them are virtually worthless. The crypto market has been rife with pump and dump ICO scams since 2015, rendering all of the ICO’s tokens worthless. Not to mentions the current market decline that has already soiled many a good cryptocurrency.
The SEC has nothing to do with the people who soiled the good name of crypto. The SEC is only trying to reduce the growing number of crypto scams in attempts to protect ignorant investors. Though the SEC will only to continue to install more regulations, it will never solve the mass of fraudulent activity that surround cryptocurrencies.
What is the problem?
The problem as you may have guessed, is people.
We are NEVER going to be able to stop people from being people and following their own desires.
Bitcoin was the first. All other altcoins are just people being people thinking they can do what someone else did better. Whether they can or not, is mute. People being people is what leads to innovation, development and fraud and there’s no way to separate them.
Even with the SEC Approval Branding, Someone, Somewhere will figure out how to fake the brand on their ICO cow and make a new scam.
What is the Future?
Security Token Offerings (STO’s) currently hold the most promise in the future of cryptocurrencies. Different from ICO’s, with STO’s you are actually buying a portion of the company you are investing in, or are promised a portion of it in the future.
STO’s will still need to register with the SEC, but in their essence they are a much more ‘secure’ investment than traditional ICO’s.
But the addition of more STO’s into the market still does not solve the 2,000+ cryptos that are in circulation, and at this point it’s unlikely that anything will in the near future. When the time does come, it’s a prediction of mine that Bitcoin will the the last one standing, ultimately more valuable than it is today.
While cryptocurrencies may still have a bright future ahead of them, the bigger picture is what’s even brighter.
Blockchain Technology is the Solution.
Blockchain is the underlying technology behind cryptocurrencies and was created by the same person who created Bitcoin. (Go to Blockchain 101 to learn the basics of this technology)
Blockchains distributed ledger technology holds great promise for many industries, some far more valuable and important that cryptocurrency. Blockchain technology can be applied to almost any industry with any type of supply chain or tracking.
Blockchain is no doubt the future.
The crypto market at time of writing appears as though is tumbling down to a bitter end. Prices continue to fall at double digit rate for all major cryptos with no clear sign of a bottom.
No matter what direction the corralled cryptos go, blockchain is here to stay.
Read about some of Blockchains current applications in the following articles.