"People have tried to hold on to the idea that all tokens are useful and not titles," says David Aktary, founder of the cryptic ERC crypto-exchange. "But it has become quite clear: if you are buying a token exclusively for profit, then it is a security."
While many in the blockchain space are adverse to regulation, ERC dEX thinks that regulation is good for industry. "The hammer will come down in 2019," says Aktary. "This has already given a bad blow to those who are trying to make money fast [with the collapse of the ICO market]. But in the long run, regulations could have a stabilizing effect on industry. Twelve federal agencies believe they have a certain level of jurisdiction over blockchain in some form or form, be it the CFTC, the SEC, the Office for Consumer Financial Protection or otherwise. "
And he adds: "Although the federal government is still trying to figure out what is the best way to regulate the crypt, it is taking action under existing regulations and it will take a while before the storm explodes."
Meanwhile, people are taking their offers offshore, and smart ones are even preventing US residents from participating. "So, not only are we having a brain drain, but we are also losing the potential benefits that such technology could bring," Mr. Aktary tells me. "Until the regulatory context is discovered, this uncertainty is damaging the sector".
Mr. Aktary kept the regulations at the state level. For example, Wyoming has approved numerous laws in an attempt to attract some broadcasters and crypto-corporations in Wyoming.
"This, however, does not necessarily protect the issuer or company from the federal government," says Aktary. "It looks a bit like the marijuana industry, with every state that makes its own decisions".
Crypto-regulation must be established at the federal level to function – possibly also in the form of international treaties. Aktary believes that the tokens of regulated securities are the future.
"Issuers are starting to" play ball "by issuing tokens according to regulations such as D and CF regulations," he says. "Trade is also catching up at this point, so that when Reg D issues are out of their lock-up period, they will have a registered location to trade on."
Regulation D allows smaller companies to raise capital through the sale of equity or debt securities without the need to register with the SEC. Reg CF allows private companies to raise up to $ 1 million from American adopters and Kickstarter-like audiences.
"And some blockchain platforms like Ethereum allow them to be regulated as they should," says Aktary. "The traditional financial system is still full of intermediaries that become irrelevant with the token of self-regulating titles on the blockchain.I can not think of a better application for Ethereum, with its distributed ledger, consensus model, clear ownership and effective the ability to code regulatory compliance directly in resources. "
He adds: "With the regulation comes legitimacy and with legitimacy comes Wall Street".
Image (s): Shutterstock.com, ERXdEX