SEC and Digital Assets
Obviously, there is a shift going on—out goes crypto and in comes the use of “digital assets”. Like executives preferring distributed ledger technology over blockchain in their texts, so it is a reprieve when coin issuers refer to their coins as digital assets and not tokens or crypto. The tune began changing mid this year when regulators more so the US SEC became “interested”, cracking the whip on marketplace and project founders. Regulators now have their eyes on promoters and celebrities accusing them of marketing securities against laid down rules. But will this narrative change? From the look of things, the crypto buzz is coming to an end and instead, we shall see the proliferation of marketplaces as Bakkt, Fidelity Investment and other big money corporations make inroads creating crypto projects that align with jurisdiction’s laid down rules.
In essence, how these digital assets will evolve creating this true decentralized dApp ecosystems and marketplaces will largely dependent on regulation. If the US SEC and other governments around the world go about to create perfect conditions then undoubtedly new opportunities will open up in this space. After all, there is the Investment Company Act of 1940 providing registration and regulatory framework for vehicles keen on investing in securities including these digital assets even if a digital asset is still a gray area.
The good thing is that the SEC is positive about DLTs. During the U. S. Senate Committee on Banking, Housing and Urban Affairs, Jay Clayton the Chairman of the SEC said DLTs will aid in capital formation and will provide very good investment opportunities for institutions as well as retail investors that leverage on the technology. No doubt, the technology has been shaping in the few years it has been in existence and Clayton is optimistic about the potential of this technology.
As a result, we expect fitting regulation to roll out in the coming months. It is increasingly likely that the entry of vehicles as Fidelity Investment, Bakkt, and their daily Bitcoin Futures will spur the next wave of digital asset investment to the demise of ICOs. Like STOs which is gaining momentum in China, Wall Street-backed investment vehicles are better regulated and because fraud has been checked, investors will find them more attractive than ICOs dodged with fraud and uncertainty.
Notice that while the SEC is clamping down fraudulent ICOs, there has been a considerable rise in the number of venture capitalist behind different digital asset projects. Though the market dip has been damaging forcing projects to fold without meeting their objectives of creating a viable product, the SEC still realize that these projects harness innovation boosting economic growth.
That may be the reason why the commission has appointed Valerie A. Szczepanik as the Senior Advisor for Digital Assets and Innovation. Besides, William Hinman, Director of Corporate Finance at the SEC said the commission will publish a simple guide clarifying when or how coins issued by a blockchain startup may be classified as a security. These we reckon is in their readiness to ensure that 2019 run smoothly.