A setback to virtual currencies as they are being regulated
21st, April 2018 - News
A group led by venture capital firms Andreessen Horowitz and Union Square ventures, which they called as Venture capital working group, a team of lawyers and investors has been gathered for a meeting with the Securities and Exchange Commission to develop a safe harbor for at least some digital currencies and view these digital currencies in a different light and also to create long term policies for their operations, to protect themselves from being termed as securities.
The group met securities Exchange Commission on 28th march in Washington to present their ideas on creating a safe harbor that would allow some digital tokens to be considered as utility tokens rather than Securities. As tweeted by the Nathaniel Popper a NYT writer, “Amid the big regulatory crackdown on virtual currencies, I've heard that Andreessen Horowitz led a group of vc's and law firms that visited the SEC late last month and argued for a "safe harbor" for at least some initial coin offering tokens.” At present thousands of virtual currencies including second most widely used digital token Ether are created through Initial Coin Offerings(ICO) in which entrepreneurs sell their digital tokens to raise money for their projects. These are generally internal methods that the entrepreneurs are creating to attract funding’s for their firms but the problem is that these coins are traded in the unregulated virtual currency exchanges and the entrepreneurs viewed these as a utility tokens for payment and no as investment or securities.
But jay clayton , chairman of SEC every tokens issued through ICO’s should be registered and should traded only trough regulated exchanges with paperwork like how other stocks and goods are traded. But the venture capital firms views this in a different angle, they thinks that the value of virtual currencies like Ether will come down drastically if they were referred as securities. and this team of venture capital working group have put a proposal that if they achieve full decentralization digital token should generally exempt from the securities law. It also said that when full decentralization can be under several circumstances, including when token creator been denied control over the network based on its ability to make unilateral changes to the functionality of the tokens.
The investors also believe that cryptocurrencies like bitcoins, Litecoins, Munero doesn’t have any effect because it was not originally issued through ICO’s.
But many of the entrepreneurs have started searching new ways as the securities and some exchanges have talked about getting registered as official securities and exchanges. Now the question is what are the steps of the SEC.
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