SEC Announces Enforcement Actions Against ICOs As Crypto Markets Tumble

John Vibes

Yesterday (Nov 14th) the U.S. Securities and Exchange Commission (SEC) released their annual enforcement report, revealing dozens of actions that the regulatory agency took against ICOs and digital assets this year.

News of these enforcement actions were not made public until the details were announced in the following Tweet:

The fine print of the report indicated that many of the ICOs in question are still ongoing and operational, which is not unusual in such cases.

Unless an investment is clearly fraudulent and criminal, the SEC will typically allow the businesses they have penalized to continue operating and generating revenue, but the balance sheets of these companies often take significant damage because a large portion of that revenue disappears due to fines.

The report states that:

When warranted, the Division has recommended enforcement actions to the Commission in matters involving ICOs. As of the close of FY 2018, the SEC had brought over a dozen stand alone enforcement actions involving digital assets and ICOs. While many of these cases have involved allegations of fraud, the Division also has pursued enforcement actions to ensure compliance with the registration requirements of the federal securities laws. In the past year, the Division has opened dozens of investigations involving ICOs and digital assets, many of which were ongoing at the close of FY 2018

 

Recent SEC Activity

At last week's Fintech Week Conference in D.C, William Hinman, director of Corporation Finance for the SEC, announced that the agency will finally be issuing "plain English guidance" on ICOs. After years of keeping crypto investors in the dark, the SEC has recently started imposing standard financial regulations on digital assets.

Instead of laying down guidelines for people to follow however,  the agency seems to be classifying blockchain businesses in ways that they can be fined under traditional laws. While the industry has yet to see clear guidelines,  it is beginning to see enforcement.

Last Thursday, the SEC announced that it had settled charges against Zachary Coburn, the founder of decentralized exchange EtherDelta. The agency claimed that the decentralized exchange "operated as an unregistered national securities exchange," a charge that left many exchanges and blockchain based projects in fear of similar action.

It is possible too that this regulatory confusion played at least some role in this week's massive sell-off in crypto markets, in which many coins lost 20% of their value or more, with bitcoin (BTC) dropping below $6,000 for the first time in several months.

Rwanda’s Central Bank Reportedly Considering Launcing Its Own Cryptocurrency

Michael LaVere
  • The National Bank of Rwanda is considering developing a digital currency. 
  • Planning to use Canada, Singapore and the Netherlands as model countries. 

The National Bank of Rwanda (NBR) is reportedly considering the development and launch of a state-backed cryptocurrency. 

Rwandan Digital Currency

According to a report by Bloomberg published on Aug. 22, the central bank is looking into the feasibility of launching a cryptocurrency that would make processing transactions more efficient in addition to boosting economic growth. 

The report claims that the NBR intends to learn from the experience of Canada, Singapore and the Netherlands--other countries that have tested the use of blockchain technology backing a central bank digital currency. 

Financial Stability Director-General Peace Masozera Uwase told Bloomberg in an interview, 

There are still concerns about how exactly you convert the entire currency into digital form, how to distribute that and how fast can you process those transactions. Challenges come in, if technology is down how do you deal with such issues? “We will join in once we are ready.

Rwanda’s consideration of a digital currency comes just weeks after it was reported that China’s central bank digital currency is set for launch, despite the country’s negative stance towards bitcoin and cryptoassets. 

However, the global attitude of central banks is gradually shifting towards the issuance of a digital currency, as existing financial systems seek to find ways to keep up with the fintech revolution being generated through crypto and blockchain.