Two US financial regulators are used for clients who have been involved with cryptocurrency, in the first attempt to regulate a growing industry.
In the first case, the SEC took action against crypto hedge funds, alleging that California’s Crypto Asset Management LP management funds misrepresented itself as “the country’s first crypto fund of regulated assets” and operated without registration.
The agency also took action against the “super store” initial coin (ICO) offering, namely Token Lot, because it failed as a broker when connecting with digital.
The Financial Industry Regulatory Authority, the self-regulating authority that regulates the industry, meanwhile, issued its first disciplinary action for unregistered money called Hemp Coin.
Regulators continue to debate whether cryptocurrency must be securities, which means they will be issued the same as SEC shares.
Earlier this week, a federal judge ruled that US securities laws had to make an initial offer, echoing the description of SEC chairman Jay Clayton who said in February that he had never seen an ICO that was not political. The ICO is where startups launch their own cryptocurrency with money to build their business.
Securities lawyers say that because the crypto industry has matured, it is only natural that regulatory agencies seek and apply the existing rules for these new assets.
“The laws that currently exist are given as the industry grows and changes,” said Jonathan Shapiro, a securities litigation partner at Baker Botts LLP. “But I think the SEC will say they uphold traditional basic principles, and enforce them in a way that reflects the reality of their modern markets.”
However, strict rules may add legitimacy to certain companies.
“Every business given or individual participants will choose to operate in an irregular environment, but if you will get used to it, you will benefit from the notification of what the rules are,” said Shapiro.
Other lawyers said that there were several voices in the industry that regulatory tightening would scare investment opportunities from US investors.
Clyde Tinnen, partner at Withers LLP, said there was an ICO that intentionally forbade US investors to detect them in US financial regulators.
He pointed to an ICO of $ 500 million that was closed and did not interest US investors for this reason.
However, the market for ICO does not slow down. Nearly $ 19 billion has been raised for the ICO, starting this year, according to data from Coinschedule.com