The ICO mania continues

I don't know much about securities law, but I do know that securities regulators love power.

The NYT yesterday wrote about whether cryptocurrencies are securities. The answer would seem to me to be yes, obviously. But it's more complicated than that. Some creators argue that since the coins an only be used -- for instance -- in video games, that they're no different than coins in World of Warfare.

The stakes are getting higher by the day. If you haven't been following the madness, the total raised by ICOs in July was $665 million.

Nick Morgan, formerly a lawyer in the S.E.C.'s enforcement division, said that the security label was likely to apply to any coin that an investor buys with the expectation that it will increase in value as a result of the efforts of the entrepreneurs who created it.

That's a broad definition and likely means almost every ICO will be classified as a security.

If and when they are, the front lines of the battle will be exchanges.

The commission said last month that any exchange that allowed investors to buy and sell securities must be registered with the agency. None of the major virtual currency exchanges are currently registered.
"I'm sad to say that I think we will see one or more exchanges get hit by a fairly significant S.E.C. enforcement," Ms. Channing of the Argon Group said.

One way exchanges and ICOs are trying to protect themselves is banning US IP addresses from sales but lawyers say that isn't enough. In addition, regulators from other countries are likely to follow the US lead.

Here are my thoughts on where BitCoin is headed.