Digital Asset Matters Now A Regulatory Priority for SEC – Lawyer
It’s exactly a year since the US Securities and Exchange Commission (SEC) investigated whether The DAO, Slock.it, its co-founders and intermediaries may have violated the federal securities laws. The DAO, which ushered in the era of ICOs – or Initial Coin Offerings – raised about $12 mln in 2016 to create and hold assets through the sale of DAO Tokens to investors that would be used to fund several projects. Its platform was later attacked through a flaw in its code which enabled the hacker(s) to steal approximately a third of its assets.
SEC deemed the tokens to be securities hence warned that similar assets offered and sold in the US must be registered with it or must qualify for an exemption. Ever since this first investigation into a blockchain organization, ICOs from various parts of the world have steered clear of their offerings within the US jurisdiction.
However, a former SEC lawyer who was a Senior Counsel in the Office of Small Business Policy in the SEC’s Division of Corporation Finance, has said that digital asset-related matters have been a regulatory priority for the Commission. This is going by its at least twenty instances of formal public commentary or by its Chairman, Commissioners, and staff in the past year, says in a statement issued on Wednesday July 25.
“Yet, the vast majority of SEC guidance was in the form of largely basic reminders as to the fundamental reach and application of the federal securities laws,” Fallon, now a principal at blockchain law firm Blakemore Fallon & Co and founder of Ketsal Consulting, adds. “Even the recent remarks by CorpFin’s Dir. Bill Hinman — while incredibly helpful as way to conceptualize issues like decentralization — reinforced, rather than altered, the most basic securities laws concepts.”
He notes that the most important takeaway from the past year should be “a market-wide appreciation for the fact that the SEC is not going to abdicate its regulatory responsibilities in light of recent technological advancements or the investment opportunities they present. Nor should it.
“This means that the market will now enter into a phase of compliance where securities laws issues and other regulatory concerns are baked into digital asset business models from the get-go, as opposed to grafted in post hoc. And, once regulatory issues are addressed, the potential for distributed ledger technology and any related digital asset will finally begin to be realized.”
Fallon’s reflection on how far the industry has come in the past year comes at a time when the main point of discussion within the wider crypto community is how the SEC will approve a filed proposal for a Bitcoin ETF.