Could financial innovations including the likes of Bitcoin (BTC) fit in the parameters of old laws? This was the central point of SEC commissioner Hester Pierce’s recent keynote address.
Bitcoin (BTC) Price Today – BTC / USD
The United States SEC Commissioner, while delivering a speech at the University of Missouri School of Law, cited that Blockchain-based decentralized networks don’t fit “neatly” in their securities framework. Hence, it is essential for regulators and policymakers to adjust the existing federal laws so that it can include new technological protocols. According to Pierce:
“Many of these crypto projects typically begin in a centralized model similar to that of any other firm. A group of people get together to create something. They need to find investors who can fund their efforts, which is why they sell securities, or tokens in ICOs. The SEC implements existing securities regulations to these securities offerings, meaning that they have to be conducted based on the securities laws or otherwise under an exemption.”
Understanding Good ICOs and Bad ICOs
In the last 12 months alone, the SEC has accelerated its aim to crackdown fraudulent startups that raised funds from ICOs by selling “unregistered securities.” Back in November of 2018, the Commission charged two ICO companies, including Airfox and Paragon, for realizing the sum of $15 million and $12 million, respectively from ICOs. In the year 2017, the federal regulator put an end to a $15 million ICO Munchee following charges of false advertisement.
SEC Crackdown Affected Genuine Companies
The SEC crackdown on ICOs reportedly resulted in the sacking of a number of scam funds. Yet it also impacted genuine companies. Pierce, mentioned one of these companies in her speech:
“One crypto project, Basis, recently announced that it would halt operations and return its $133 million in capital raised from an ICO to investors because of the difficulty involved in complying with securities regulations considering their team’s vision for the crypto project.”
At the same time, the SEC commissioner noted, that lawmakers were looking to filter out good ICOs from bad ICOs. She cited Congressmen Darren Soto and Warren Davidson for introducing a bill that sought for the modifications in the Federal securities laws.
Any Hopes for Bitcoin ETF?
Finally, Pierce offered insight regarding how the Securities and Exchange Commission had been treating the exchange-traded fund or ETF particularly on the Bitcoin (BTC) Blockchain and other digital currencies. The SEC commissioner remarked that the federal regulator was looking to substitute its judgment regarding the views of investors, admitting that there’s some concern about the merit-based regulatory model adopted by the SEC. In Pierce’s words:
“We rightfully fault investors who are jumping blindly at any option labeled as crypto, but occasionally we are equally impulsive regarding the avoidance of anything labeled crypto. We owe it to prospective investors to exercise caution, but we also need to help them understand that they don’t have to define their investment universe based our preferences.”
Pierce’s stance showed her support for the ultimate approval of a Bitcoin ETF in the future. Only a week ago, Robert J. Jackson Jr another SEC commissioner, said that a crypto-based ETF was inevitable.