Per an official announcement on August 28, 2018, The North American Securities Administrators Association has accentuated its crackdown on fraudulent cryptocurrency start-ups and ICOs. As part of its ongoing initiative “Operation Cryptosweep”, NASAA is actively supervising more than 200 investigations, which are also under the scrutiny of state and provincial securities regulators.
Strings Tightened Around ICO Scams
The operation commenced in May 2018 with 70 such cases has resulted in 46 regulatory and compliance actions concerning ICOs and cryptocurrency-related investment services.
NASAA President and Alabama Securities Commission Director, Joseph P. Borg believes that existence of a strong and efficient compliance mechanism is essential before such products are launched for public participation. While Borg maintained that not all ICO or crypto investment products are scam, he stressed on the importance of state and provincial regulatory laws to safeguard the investor’s financial well-being.
“State and provincial securities regulators are committing significant regulatory resources to protect investors from financial harm involving fraudulent ICOs and cryptocurrency-related investment products and also are raising awareness among industry participants of their regulatory responsibilities.”
The statement by NASAA advises investors to perform their own research and due diligence before subscribing or participating in any ICO or crypto-related investment product.
However, proponents of the crypto community argued that unlike stock equity, the nature of crypto tokens offers a “utility” or right to use the product or service in the future, and hence should not be subject to SEC laws.
Countering the above sentiment, SEC chairman made it clear in June 2018 that the commission won’t tweak its existing laws to cater to cryptocurrencies. In an attempt to educate investors about participation in initial coin offerings and avoid potential scams, SEC even developed a fake ICO website HoweyCoins.com
Bullish year for ICOs
Cryptocurrencies, primarily bitcoin came into global prominence last year when its established its ATH of roughly $ 20,000 USD per token in December. The exorbitantly bullish market attracted mass media attention and served as a lucrative attraction for hundreds of ambitious crypto start-ups.
With efficient regulatory infrastructure in place, one can expect to witness a more transparent and rapid mechanism to participate in investment activities in the cryptoworld.