Michael Arrington, TechCrunch founder named by the TIME Magazine as one of the most influential people in the world in 2008, has stated he will shun US over SEC’s behavior regarding ICOs. Arrington said:
“We received a second subpeona from the SEC, again collecting information from us as investors in a U.S. company.
The legal costs of dealing with these are not insignificant. We will not invest in any further U.S. deals until the SEC clarifies token rules. Pivot to Asia… also Lichtenstein.”
Since leaving TechCrunch, Arrington has launched an investment fund and joined an ICO-ed company, Propy, which aims to tokenize properties.
After Propy raised $15 million, Arrington announced last year he had completed the first property purchase on ethereum’s blockchain.
His fund invests in a number of other projects, but it is probable SEC is subpoenaing regarding Propy as that was a high profile token sale.
“A lot of funds are reaching out to me to ask how to avoid SEC,” Arrington said, but this is the first time such public statement is made as while previously many have loudly raised concerns, few were willing to say they were packing their bags.
The situation now appears to have deteriorated considerably and with it anger appears to have increased with Congress finally intervening. In a letter to Jay Clayton, former elite bankers’ lawyer now chairman of the Securities and Exchanges Commission (SEC), a number of Congressmen say:
“We are concerned about the use of enforcement actions alone to clarify policy and believe that formal guidance may be an appropriate approach to clearing up legal uncertainties which are causing the environment for the development of innovative technologies in the United States to be unnecessarily fraught.”
The congressmen demand clarification on when securities laws apply to tokens, stating that “treating all digital tokens as securities would harm American innovation and leadership.”
This intervention comes after a meeting in Washington DC between lawmakers and the crypto industry with a bill on ICOs to now be introduced to Congress within three weeks.
“The use of this technology is important to growth across many sectors of the American economy,” the congressmen say.
So suggesting now they are ready to make a move with this space taking the fight to Capitol Hill where a bipartisan agreement is expected as the matters in question are not a left or right issue.
They instead concern the upgrading of centuries old laws for a digital age, including the removal of discriminatory prohibitions on investments as they can not fit within an open source business model.
Some rules are however needed, with France currently leading by taking an approach whereby ICO-ing projects can voluntarily apply for a stamp of approval which guarantees a bank account while removing restrictions on investment funds regarding their ability to purchase such licensed tokens.
SEC, in contrast, has refused to accommodate this space in any way, with some suggesting a new federal regulator may be the best approach because SEC is too big already, has plenty on its plate, and comes from the old, traditional, stocks world where things work very differently.
Plus, commodities have their own regulator, stocks have SEC, so it would probably be best for cryptos to have their own regulator as well.
Otherwise, it is very much a mess. Some cryptos are commodities, some are securities, some start off as securities and become commodities, some turn from commodities into securities, then there’s this whole currency aspect. Absolute chaos.
Congress should get a grip on this because the crypto space is inspiring a generation and is channeling much energy towards very productive uses.
They should set up a lean, smart, 21st century, modern, regulatory body, which actually has tech expertise (unlike SEC) and is willing to talk to this space and work with this space because we need rules, but proper, fair, modern rules for a digital age.
And quickly. Ethereum is getting fairly close to Casper and soon sharding. It may take a few more months, but in that time, from global corporations to garage start-ups, smart men and women are building all sorts of things which may launch all at once when ethereum is finally able to eventually handle a billion transactions a day.
That may unleash the greatest race on earth, and races within races, for it is only then when the game truly begins as so far we have probably seen nothing yet.
In the meantime, and afterwards, entrepreneurs are not going to wait for permission considering the stupendous opportunities. They’ll either ask for forgiveness or leave to jurisdictions where they are welcomed with this space now able to count quite a few of them.
America, of course, should be among such jurisdictions so as to turn a page over the past two atrocious decades and so as to continue and accelerate this return of optimism, which in great part is due to the many good men and women in this space and beyond pioneering the age of digital progress.