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CLEVELAND, Ohio – US Representative Warren Davidson of Ohio announced Monday a plan to regulate cryptocurrency and the first bidding of coins through the federal government.
An initial offer of coins is when a company starts selling a cryptocurrency in the form of tokens. There is a limited amount of these tokens, which is what gives them value. Investors can pay these tokens with existing cash or cryptocurrency. Because these tokens sell quickly and end up, it gives the company a wave of money that it can use to build a product.
In the case of FileCoin, which has the largest initial coin offering to date to $ 257 million according to the New York Times, the money will fund a blockchain-based storage system. People who own FileCoin tokens can use them to pay for this space.
So far, the federal government has not regulated a company's ability to raise funds through initial coin offerings. The Federal Security Exchange Commission is trying to repress fraudulent offers, in which a company inflates the value of its tokens by making promises it can not keep. The SEC is creating a new division to talk with financial technology companies that want to launch the first coin offers.
In the past, the SEC noted that several initial coin offerings used tokens as publicly traded securities, which are subject to regulations. The bipartisan bill would try to create a "class of activity" for tokens, which would prevent them from being classified as securities, but would also allow the federal government to regulate the initial coin offerings more effectively.
"What this does for entrepreneurs is that it gives people the chance to raise capital in a different way," he said. "This
Legislation has not yet been introduced, but it should soon become public. Davidson, a Republican from Hamilton who invited more than 30 industry leaders to discuss potential regulations in September, is confident about what it means for the future of the financial sector.
Davidson announced his plans Monday at the Blockland Solutions conference, held in downtown Cleveland. The four-day event is discussing applications for blockchain technology, the online distributed accounting system on which the cryptocurrency is based.
Although the conference focuses on uses outside the cryptocurrency, one main point is how blockchain can be used in government. Governor-elect Jon Husted spoke on Sunday evening about how blockchain technology can be incorporated into InnovateOhio, a plan to modernize Ohio's government processes.
