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Two US financial regulators issued a series of actions earlier this week against companies involved in cryptocurrencies, in the first major attempts to regulate the rapidly growing industry.
In the first case, the SEC made its first actions against a crypto hedge fund, claiming that the California-based fund manager Crypto Asset Management LP has misrepresented as "the country's first regulated encryption fund" and has operated unregistered.
The agency also took action against a "super store" of self-defined initial offerings (ICO), called Token Lot, for not registering a broker while linking buyers with digital assets .
The Regulatory Authority of the Financial Industry, the Autonomous Authority Regulating the Brokerage Industry, has meanwhile issued its first disciplinary action for unregistered cryptocurrency security called Hemp Coin.
Regulators continue to discuss whether cryptocurrencies should be classified as securities, which means that they would be governed similarly to the actions of the SEC.
Earlier this week, a federal judge ruled that US securities laws should govern initial coin offerings, echoing the opinion of the SEC president, Jay Clayton, who in February had declared that he had never seen an ICO that was not a security. ICOs are where startups publish their cryptocurrency in exchange for money to build their business.
Security lawyers say that while the cryptography industry has matured, it is only natural that regulatory agencies are playing and applying existing rules to these new resources.
"Existing laws are being provided as industry grows and changes," said Jonathan Shapiro, partner for securities disputes at Baker Botts LLP. "But I think the SEC would say that they are strengthening traditional and basic principles and enforce them in a way that reflects the modern reality of their markets."
However, in the long run consolidated rules could add legitimacy to certain cryptic companies.
"Any company or individual participant will prefer to operate in a less regulated environment, but if you are going to abide by the rules, you will at least benefit from knowing what the rules are," Shapiro said.
Other lawyers say that there is some concern in the crypto industry that restrictive regulations will scare investment opportunities for US investors.
Clyde Tinnen, a partner of Withers LLP, said that there are ICOs who intentionally prohibit US investors from participating because they do not want to be subject to US regulatory authorities.
He indicated a $ 500 million ICO that closed and did not want US investors for this reason.
However, the ICO market is not slowing down. About $ 19 billion has been collected for ICOs to date, according to data from Coinschedule.com.
