Silicon Valley Crypto Investors Asked SEC To Not Categorize ICO Tokens As Securitybr>
Silicon Valley venture capital firms Andreessen Horowitz and Union Square Ventures have reportedly urged the US Securities and Exchange Commission (SEC) to take an industry-friendly approach to initial coin offering (ICO) regulations.
According to the Wall Street Journal, the venture capital firms met with top officials of the SEC’s Division of Corporation Finance on March 28. Andreessen was represented by managing partner Scott Kupor and general counsel Ryan Ward, while Union Square was represented by partners Brad Burnham and John Buttrick. They were also joined by lawyers from Cooley LLP, Perkins Coie LLP, and McDermott Will & Emery LLP.
The group repotedly argued that ICO tokens should not be considered as investments or security, but as products that can be used to access blockchain-based services and networks, or, in other words, utility tokens. The firms reportedly assured the SEC that ICO issuers would be held accountable in cases of fraud.
The firms said SEC officials have expressed skepticism about giving such a broad exemption. They speculated that the SEC is more likely to opt for a “limited exemption” from oversight, wherein each investor would acquire investments limits, and the purchased tokens would not be re-sold to third parties for profit.
SEC Chairman Jay Clayton have said that he believes most ICO tokens are securities, which means that issuers are subject to significant regulatory restrictions when conducting their token sales.
During a speech at Princeton University earlier this month, Clayton said: “If I have a laundry token for washing my clothes, that’s not a security. But if I have a set of 10 laundry tokens and the laundromats are to be developed and those are offered to me as something I can use for the future and I’m buying them because I can sell them to next year’s incoming class, that’s a security.”