Initial coin offerings: SEC stance discouraging issuances

Author: Olly Jackson | Published: 3 Aug 2018

Initial coin offering (ICO) issuers are increasingly adopting a two-tiered approach which satisfies retail investors and institutional investors - and regulators - by offering both security tokens and utility tokens in a single offering. But the Securities and Exchange Commission’s (SEC) view that all ICOs are securities is making this impossible in the US and deterring issuers.   

Many ICOs now offer security tokens for institutional investors and high-net worth individuals to avoid regulatory uncertainty, and utility tokens for retail investors which would allow the core cryptocurrency community to invest. While the regulatory landscape is still far from clear, issuers are taking matters into their own hands and adopting securities rules even if they may not need to do so.

"Much of the crypto community and existing businesses who want to use crypto in their business would welcome regulatory certainty," said John Salmon, partner at Hogan Lovells. "Every issuer of...