The decision on equating tokens to securities, taken at the end of July 2017, may have a significant impact on the market ICO.
According to Roman Buz'ko and Yevgenia Krasnova, leading experts in law office Buzko & Partners, the decision on equating tokens to securities, taken at the end of July 2017, may have a significant impact on the market ICO.
In accordance with the decision, tokens DAO now equated to securities, therefore, they are subject to mandatory registration in the United States. Under this bill fall person performing the operations (in particular exchange) with cryptocurrency. Thus, it is unclear how the bill will affect the actions of the developers of The DAO. The securities Commission this question does not comment.
In accordance with this decision, the sale of tokens on the territory of the United States falls under the ban. As for exchanges, trading this cryptocurrency, they must obtain the appropriate license. Given this situation, we can predict a significant decline in the market ICO.
Details about The DAO
This project, implemented within the framework of the Ethereum blockchain, it was planned as an alternative to venture funds. The organizers assumed that investors can participate in voting for the project and thereby affect the performance of the project. Unfortunately, the theory of the impact of democratic principles on venture capital investment remained beautiful idea. Implementation failed due to errors in the code cryptocurrency that significantly weakened the protection. The consequences were not long in coming — in process hacker attacks from the system was removed more than 720 million dollars.
Details about the Commission's decision
After studying the details of the history, the Commission concluded that under American law, tokens correspond to all the characteristics of securities. To come to this decision, lawyers referred to the precedent considered by the Supreme court of the United States in the late 40-ies of the last century. In law it is known under the definition "investment contract".
According to the case, under the definition of "securities" is the investment with the expectation of making a profit, that is, practically, any.
Taking into account the above factors, the Commission adopted the following conclusions:
Under the definition of an investment falls any investment, that is, and cryptocurrency;
The project investors were counting on making a profit, and the developers of The DAO repeatedly stressed that this is the main task of the project;
For profit was a third party. This criterion has attracted the most attention of the Commission. Under U.S. law, these persons had to take an active part in financial planning. Thus, we can state the profit as a result of own actions.
This approach did not accept the Commission for several reasons:
The team took important decisions, regardless of the investors;
Was legally restricted the rights of investors to dispose of their votes.
Summing up, the Commission noted that the Issuer in this case can only be a legal person, that is, The DAO.
Why was there no informed claims
First of all it should be noted that American investors previously were limited opportunities to participate in such projects. The theme of the recognition of tokens as a full-fledged securities has been repeatedly raised earlier. Through this approach, the project implementers hoped to minimize the risks.
Equally important is the issue of non-residents of the States participating in the system, especially given the equating of tokens to securities. In this case, you should consider the territorial laws of the country whose citizen is a non-resident. Moreover, consider the situation with regard to relations to cryptocurrency and cryptoamnesia. To do is not possible, because many investors prefer anonymous participation.
How will the decision on the market ICO
To investors will be a question of tokens: it is necessary to consider the cryptocurrency as a product or securities. In the latest version of the American investors will get the opportunity to work on the exchange only after registration of the prospectus and granted the relevant license.
Given the circumstances, this option will be forced to take serious market players ICO, having the ability to afford large expenses. In particular, from informal sources it became known that this decision leans ICO Filecoin. But even in a negative scenario of a ban token in the US remains a promising market in Asia.
Despite the Commission's decision on the recognition of the token as analogous securities, the issue is still under consideration. With the economic component of the issue has been resolved, but there are other projects with less pronounced economic component.
How relevant report criteria
From the point of view of institutional investors, such a solution has positive roots in the form of legislative certainty. This allows you to expand the portfolios cryptoprotocol. As for private investors, they will not be able to participate in investments with a high degree of risk.
The final decision depends on the regulators of the G7, but given the influence of American jurisdiction, we can assume that the reaction will be similar. According to analysts, this decision will come and in other countries. This is not to say that tokens are not collapsed, but we can assume some kind of defragmentation of the market ICO.
Recognition of cryptocurrency as an alternative to securities already talking about the viability of the project, therefore, for its development opportunities.
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