Regulatory body identifies cryptocurrencies as financial securities
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In the world of digital coins, Initial Coin Offerings (ICOs) have been a hot topic for several years. These fundraising events, which allow companies to raise funds by issuing their own digital tokens, have been a significant part of the cryptocurrency market. However, the regulatory landscape for ICOs in the United States is clear: they are subject to the Securities and Exchange Commission (SEC)'s oversight.
ICOs are often structured in a way that makes them appear like securities, falling under the SEC's jurisdiction. This is because the tokens offered in ICOs can represent investment contracts or other securities, especially when offered by centralized entities controlling the asset’s development or promotion.
Recent legislative developments, such as the 2025 GENIUS Act, have focused on stablecoins and digital commodities. While this law establishes the first federal framework specifically for stablecoins, it does not replace the SEC's authority over securities offerings like ICOs. Instead, it complements it by carving out a clear regulatory framework for stablecoins, which are typically treated differently from security tokens.
The Commodity Futures Trading Commission (CFTC) has also been granted jurisdiction over digital commodities (e.g., Bitcoin, Ether) that are decentralized and not securities. However, this jurisdiction does not extend to ICOs classified as securities.
Under the current regulatory framework, ICOs deemed securities must comply with disclosure, registration, or qualifying exemptions under federal law. The SEC's oversight of ICOs emphasizes coordination among regulators but keeps ICOs squarely under the SEC’s securities law authority.
In Russia, the situation is different. The Russian Finance Ministry has published a new draft law "On Digital Financial Assets" to regulate cryptocurrencies and ICOs. However, the law does not mention any specific cryptocurrencies or ICOs, and it does not provide a framework for the protection of investors in cryptocurrency investments.
The price of Bitcoin and Ethereum, two popular digital coins, fell 10% today, possibly due to the SEC's ongoing enforcement and regulatory actions. Despite this, companies have continued to raise large sums through ICOs. Tezos, a new blockchain project, raised $232M last week, making it the largest ICO to date. Startups have raised over $1,3 billion in digital coin sales this year.
In conclusion, while new federal laws like the GENIUS Act focus on stablecoin regulation, Initial Coin Offerings remain regulated as securities offerings under SEC authority. The SEC's oversight of ICOs means that offerings deemed securities must comply with disclosure, registration, or qualifying exemptions under federal law. This regulatory landscape is likely to continue, with ongoing enforcement and regulatory actions reinforcing the SEC's role over ICOs.
Technology plays a crucial role in facilitating Initial Coin Offerings (ICOs), as these digital fundraising events often utilize blockchain technology for token issuance and trading. Investing in ICOs, however, falls under the jurisdiction of the Securities and Exchange Commission (SEC), especially when the tokens offered resemble securities. Despite the ongoing regulatory challenges, the popularity of ICOs remains strong, with companies continuing to raise significant sums through these events in the digital coins market.
