Unclear regulations stymie digital asset innovation, lawyers say

Keith Lewis

Would-be financial technology innovators are shying away from digital assets because of the cost to comply with, or risk of drawing the ire of, U.S. regulators, according to securities law practitioners tracking financial technology.

The Securities and Exchange Commission is still vigorously enforcing rules for digital offerings, even years after their launch, in ways that leave the industry in the dark on how to comply, they say.

“I would say the SEC’s lack of formal binding guidance has definitely slowed down token offerings in the United States and created some uncertainty for issuers,” Andrew Hinkes, a Miami-based securities litigator, told CQ Roll Call.

At issue are initial coin offerings, or ICOs, which were all the rage in 2017. The idea was to raise money by selling digital tokens that could be used for future credit with the company issuing them, and to use the capital as seed money to develop software that investors would have access to.

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