In an effort to get more clarity on the regulation of digital currencies, U.S. representatives wrote to U.S. Securities and Exchange Commission (SEC) chairman Jay Clayton. The lawmakers are looking for the official to lay out how the agency plans to regulate digital currency in clearer terms, CNBC reported.
The U.S. representatives wrote in the letter, “It is important that all policy makers work toward developing clearer guidelines between those digital tokens that are securities, and those that are not, through better articulation of SEC policy, and, ultimately, through formal guidance or legislation.”
In addition, the letter writers warned that the ambiguity around the treatment of digital token sales and offers could cause innovation to move to other countries. “Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere,” the lawmakers wrote.
The Securities and Exchange Commission’s leading authority on bitcoin, cryptocurrency and initial coin offerings (ICOs) has ruled that some well-known cryptocurrencies like bitcoin and ethereum are not securities. However, the coins offered during initial coin offerings very likely are entirely — or mostly — securities, according to news from CNBC in June. As such, they can expect to come under the regulatory control of the SEC and relevant securities laws.
“Central to determining whether a security is being sold is how it is being sold and the reasonable expectations of purchasers,” William Hinman, head of the Division of Corporate Finance for the SEC, said in a speech at the Yahoo All Markets Summit: Crypto conference in San Francisco. The specific issues, according to Hinman, hinge on the buyer’s expectations for the coin when purchased and whether the buyer expects that the coin will result in a payout from a third party (presumably from whom a buyer purchases the coin).
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