Making sense of the SEC's ruling on tokens and its implications on the ICO industry @BlockRush

Token, token, token; ICO here, ICO there, and now the US Security and Exchange Commission(SEC) wants a piece - only to upset the Blockchain industry.

Anyone who thought the SEC would or should not have gotten involved in the ICO industry is mistaken. We live in a governed society where there are laws to dictate everything we eat, think and do - and you expert the Blockchain industry to go unnoticed?

We had it coming, now its here and we have to deal with it. In today's post, @BlockRush will look at the good and the bad(but not the ugly) effects of the SEC's ruling on Blockchain tokens.

Who are the SEC?

The SEC is the US's assets and security exchange commission. They are responsible for regulating all US assets-based financial instruments with the mission to reduce ponzi schemes.

The SEC also has interests in regulating non-US based ICO campaigns which would see the participation of US citizens.

What has the SEC done?

On 25th July 2017, the SEC passed a ruling stating the some Blockchain tokens met its criteria for digital securities and hence where subject to all of its regulations on securities.

The ruling came after it had investigated the case of The DAO, the first $150 million crowdfunded ICO project on Ethereum which only turned into a forum.

The SEC investigated the activities of the company behind the project, the Germany-based Slock.it. One could say Slock.it is partly responsible for the SEC's involvement in the ICOs as they left a very bad record in their management of the The DAO saga which eventually resulted in the forking of Ethereum as we know it.

From denials to accusations to leaks of deliberate intentions of mischiefs among the Slock.it team -  Slock.it have left the intentions of future ICO issuers in question.

The SEC's ruling will have both positive and negative implications on the Blockchain industry for several reasons.

What are the GOOD implications of the SEC's ruling?

Legitimizes ICOs

The ruling shows that the SEC has officially recognized ICOs as the digital form of IPO and tokens as potential digital shares. This recognition means that officially the State recognizes ICO - even if it does not support them.

Universities and dictionaries would want to update their lists for types of digital assets to include the newly recognized one - blockchain based crypto-tokens.

Investors might want to add these new securities to their portfolios!

Brings ICOs home

In an attempt to escape from regulations and legal complications, most ICOs have been launched from the most remote and suspicious parts of the world.

With this new found legitimacy, we would have more and more real company which are based in developed economies participate in ICOs. Currently, almost all major ICOs are hosted in island nations and tax havens - away from any established civilization.

Perhaps now we can have ICOs next door. That local groceries shop next door can issue and ICO and your favorite gym or bar can too! Even the local foundation you support can issue an ICO just as your favorite premier league team can issue can ICO. The business your work in can issue and ICO and that musician your are obsessed with can also issue an ICO. Oh, and you too can, its legal!

Attracts new investors

While current ICOs campaigns are able to raise huge chunks of money from enthusiasts, legitimizing ICOs would bring in sophisticated and accredited investors, Venture Capital firms, mutual funds, hedge funds, organizations, institutions and corporations. Theses new investors command hundreds of billions of dollars.

Attract new mainstream businesses and players

The US stock markets claims a whopping 70% of the global stock market value! Then again the US leads the world in small and medium size businesses with over 48 million small and medium size businesses!

Imagine the huge potential boost the ICO industry would get when it gains mainstream adoptions! The SEC's ruling which has now added some legitimacy to the ICO instrument is certainly the biggest move which could see ICOs gain mainstream adoption.

What are the BAD implications of the SEC's ruling?

No more havens

We know America leads the world economically and hence with this new SEC ruling, you can expert other nations to follow suit until there are no more havens for unregulated ICO campaigns.

Even with the few havens that there might be, people would not trust the credibility of any ICO campaign coming from these island nations tax havens no matter how genuine they are. Participants may also be likey to face sanctions if they are found investing into unregulated ICOs.

Centralizes control of ICO

While Ethereum, Waves and other token platform boast of being decentralized, autonomous and anonymous, that promise may not live long after the SEC's ruling.

The SEC's wants all issuers to ask for their permission/approval before issuing new tokens. This makes the SEC the middleman in the process of issuing ICO - the very thing that ICOs were designed to avoid!

Increase costs and inefficiency

When bureaucracies get involved in any process, they increase cost, make it inefficient and slow. The SEC's approval requirements may slow down the process of issuing ICOs to that of issuing IPOs.

Then again there is the cost factor - the SEC would definitely charge middleman fees for their services of regulation and for the tasks of investigation the background of ICO issuers before approving their ICO.

Restrict participation

The SEC could restrict ICOs participation in several ways including banning certain countries from participation, increasing the minimum amount a person a invest into an ICO and even restricting certain ICOs to only accredited investors under the name of protecting the average investors from high-risk high-gain investment offers.

Yes, you can scream; SEC! SEC!! SEC!!! How may times did we just call you?

Here is our take of the SEC's ruling

Contrary to most Blockchain enthusiasts, we think the SEC has not done anything evil. The Blockchain industry had its regulations coming and they are now here.

We just have to man up and deal with it - not curse, accuse and condemn. The SEC would be here for as long as there is government and no amount of fighting, resistance or boycotts would change that.

What we need to do is to learn to work around it - the ruling does apply to only tokens which share the properties of assets. We need to adapt and new need to get over it.

Let the SEC do whatever they want; we too will do whatever we want - after all is that not the actualization of democracy?

Do you remember the story of Bitcoin? It would have remained a cyberpunk and underground innovation if not for the mainstream regulated companies such as Coin Base, Bit Pay and Blockchain who brought bitcoin to the average users and made it the commodity it now is.

The same could be said of the ICO industries, by legitimizing them through regulations or whatever, the SEC would be move them out of the hive of cyberpunks and basement hackers and finally bring them to the mainstream businesses such as Apple, Facebook, Google, Amazon and Samsung.

In life you do not always get what you want but you would have to learn to manage whatever you get. Tokens can still be issued, be decentralized and be partially anonymous. The only thing the SEC wants to touch is the autonomy(due to credibility reasons) of the issuers - what is the big deal?

In as much as you may not like your government, you have to understand the fact that they are the one who have maintained an orderly, open, peaceful and prosperous society for us all - not the cyberpunks.

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Tell us your take of the SEC's ruling:

• What do you think of the SEC's ruling on Blockchain tokens?
• Do you think the SEC's ruling is good or bad for the ICO industry?
• Do you think the SEC is right about regulating the industry so as to reduce ponzi scheme?
• Do you think the SEC's involvement in the Blockchain ICO industry would give it credibility?
• Or you you believe the SEC has no business in Blockchain the ICO industry?

Let us know of your thoughts by commenting below! Follow @BlockRush to receive updates on the Bitcoin, cryptocurrency as well as other intriguing #Blockchain reports.

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