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ICOs are a violation of federal securities laws

A former SEC (Securities and Exchange Commission) commissioner told the New Times, "ICOs are the most notorious and widespread violation of federal securities laws"

For the former SEC Commissioner, Mr Grundfest, "it's more than the extent of the violation, it's the almost comical quality of the violation" that must be denounced.

What are ICOs?

First of all, the ICOs are "Initial Coin Offering".

This is a very recent mode of fundraising for companies, and very popular lately.

This year the ICOs have experienced a real craze with about fifty ICOs per month.

These offers are similar to the Initial Public Offers, but investors do not receive shares in the company, but tokens.

These tokens can sometimes be used to trade and end up in speculative markets.

In fact, these ICOs help to avoid the regulatory restrictions that small businesses often face when they start financing.

When is the regulation of ICOs?

Mr Grundfest wonders about the lack of legislation concerning these ICOs: "I wonder why they have not arrived yet".

He is not alone in being indignant about this lack of legislation.

Arthur Levitt, also former SEC commissioner, explains this lack of enthusiasm to legislate, by the complexity of the problem.

Meanwhile, Jay Clayton, the current president, said: "Where we see fraud and where we see people engaging in offers that are not registered, we are suing, because that kind of thing has a destabilizing effect on the market."

For their part, advocates of ICOs argue that their products are usable in the real world as a bargaining chip, unlike traditional securities.

It is undeniable that for the regulators, to see a market of billions of dollars to escape them, is more than exasperating.

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