The United States Securities and Exchange Commission (SEC) for the first time made two crypto startup to register the tokens, which were distributed through the ICO under the form of securities.
Last week, the SEC charged the founder of a decentralized exchange EtherDelta, that coupled with the above events indicate impending changes in the ICO industry.
Nic Carter, a partner at Castle Island Ventures, a venture capital fund focused on public blockchain startups, believes that the SEC specifically accumulates precedents to combat fraudulent activity and the distribution of unregistered securities.
"To predict the future actions of the Commission is fairly difficult, but if I understand her strategy, she has been collecting cases where it’s clear that there’s going to be a profit made with the token".
Stephen Palley, a lawyer with D.C.-based law firm Anderson Kill, agreed with this theory and suggested that the SEC will begin to regulate 95% of all token that appeared in the last two years.
On Friday the Commission published a statement in which he explained the methods of control of ICO, cryptocurrency exchanges, secondary market trading platforms and other entities that facilitate token transactions. The statement also said that startups issuing tokens will have the ability to comply with the requirements of the Federal legislation in the field of securities, even if they already broke the law and offered investors unregistered digital assets under the form of securities.
To companies who do not wish to violate securities law, Palley recommended to use the services of lawyers. Nick Carter, in turn, advising ICOs to move away from their tokens immediately:
"I believe that all ICO it is necessary to stop the activity, delist the tokens, get investors money back and pursue a normal business model that doesn’t require a token".
Anthony Tu-Sekine, a partner at law firm Seward & Kissel, says that the SEC intentionally increased the scale of their actions in the ICO industry. For example, in last year's report on the draft of The DAO, the Commission's position has already been indicated, however, the founders of the project were not punished because had time to pay off investors.
In its statement, the SEC recommended that ICO projects to apply to lawyers and the regulators through the FinHub project.
It is noteworthy that some projects may be difficult to return funds to investors. According to Carter, projects like Paragon and Airfox, able to provide full rescission to their investors, however, the remaining startups will face serious problems in regard to the payment of funds. Even those projects that were not engaged in selling their own tokens, can lose part of the reserves due to the bear market.
"It is important to understand that ICO is completely discredited as a method of raising funds. I think the market does not immediately realize that the era of easy money is over."