A new way of raising funds have been introduced in the market, thanks to Blockchain. Companies and startups working in Blockchain sector are raising funds by issuing tokens via Initial Coin Offerings (ICO).
Gone are those days when budding entrepreneurs use to run after Banks, Venture Capitalists, Angel Investors etc. “Initial coin offerings” (ICOs) are the current rage among startups in the Blockchain space.
Blockchain is a revolutionary technology of storing and maintain data in a decentralized public ledger. The first product built on Blockchain technology is Bitcoin, the world’s most valuable currency as of now.
Startups/Companies creating and issuing digital tokens to raise funds for their ideas have a responsibility to protect their investors. A U.S. Securities Exchange Commission official made the statement . This is the first public comments on the issue made by an agency employee.
“Whether or not you are regulated by the SEC, you still have fiduciary duties to your investors.If you want this industry to flourish, protection of investors should be at the forefront.”, says Valerie Szczepanik, the head of the SEC’s distributed ledger group.
The SEC official, who is also an assistant director of the commission’s division of enforcement, spoke at a panel discussion at the Consensus Blockchain conference, recently held in New York.
She asked the startups or companies issuing token to have such a mechanism which has a built-in protection. Protection as in protection of their funds and a complete fair discolusre.
“At the SEC, we like to facilitate capital-raising, but at the same time, we want to ensure a fair market,” said Szczepanik.
However, Szczepanik made it clear that these are her views and not any official rule by US Securites and Exchange Commission.
“Whether a token is a security or not is a fact or circumstance-based thing and you have to really pick it apart,” Szczepanik said
The concerns are raised due to some fraudlent activities that are/were taking place. Companies/Startups were raising funds via ICO and then never showed their faces.
This happened in the case of Bitcoin Plus, where the original founders raised fund and then went on vacations permenantly. Only the original investor carried it forward along with a team of new developers.
KryptoMoney.com urges it’s readers to study carefully about the organization before investing in it’s ICO. Study and understand the business plan, team, organization, any investor which have invested in the venture, other details, etc.
KryptoMoney.com posts latest news and updates about Bitcoin, Blockchain and Cryptocurrencies. Subscribe to our newsletters and stay updated.
Keep in mind that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. We try our best to keep things fair and balanced, in order to help you make the best choice for you.
