Op/Ed By Bill Taylor/Managing Editor
Just when you think there may be some innovation and a willingness to look at ICOs in a different light, the regulators (hi SEC) continue to befuddle. Now, everyone knows that the issuance of ICOs (initial coin offerings) have been a big boon in the way companies can raise capital, foster innovation AND, of course, create opportunities for scams and fraud. As always, the scammers and fraudsters cause headaches for legitimate business operators, bring the ominous scrutiny of regulators and, in this case, give ICOs a ‘”black eye”. To be sure, whether its an IPO, ICO or private placement, there is ALWAYS a risk in investing and a certain amount of regulation is “a good thing”.
So, with the U.S. Securities & Exchange Commission (SEC) now out to protect women, innocent children and yet to be born babies (men? who cares!), ICOs are being replaced by STOs. What are those, you ask? They are Security Token Offerings. Whats the difference, you ask again? Well, since the SEC hasn’t figured out how to define and regulate ICOs, they have decided to shove and cram those ICOs into the old reporting company box (a/k/a, public companies). So, the SEC has decided to add a layer of regulations (and costs) to innovative companies by making them “go public” (reg D, IPO, etc.) and THEN they can do a STO.
Note: we all know that “penny stocks” are SO much safer than ICOs, right? Oh, and after you do the “security” filing and then do the STO, you can get on a regulated exchange (again the SEC oversees them) to offer them to the same people you wanted to originally………but after much more cost.
The rest of the world has done something much more innovative. They started from scratch to create new regulatory oversight to actually encourage ICOs and innovation. Maybe the SEC should make a call to Gibraltar, Bermuda, South Korea, etc. to see how its done. OR, maybe this huge new blockchain/ICO sector will move there. Hmmmmm! Maybe its already happening.