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VCs of Silicon Valley Urge SEC for Lenient ICO Regulations

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VCs of Silicon Valley Urge SEC for Lenient ICO Regulations

CryptoCentral May 16, 2018
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In brief:
Andreessen Horowitz and Union Square Ventures, the Silicon Valley venture capital firms have urged US regulators to go easy with initial coin offering regulations by taking an industry-friendly approach.

Reportedly, two Silicon Valley venture capital firms have urged US regulators to go easy with initial coin offering (ICO) regulations by taking an industry-friendly approach.

Both Andreessen Horowitz and Union Square Ventures have been known in Silicon Valley as the top cryptocurrency investors and have also invested in CryptoKitties’ latest USD $12 million funding round.

According to the Wall Street Journal, on March 28 Andreessen Horowitz and Union Square Ventures’ representatives held a meeting with top officials of the US Securities and Exchange Commission’s Division of Corporation Finance. They urged the agency to provide them “formal assurance” that the SEC would not ban ICO tokens in which they have invested. Lawyers from Cooley LLP, Perkins Coie LLP, and McDermott Will & Emery LLP also joined the VC firms.

Andreessen has invested in several ICOs, along with having industry businesses like Coinbase and OpenBazaar. Similarly, Union Square Ventures has contributed to cryptocurrency hedge fund Polychain Capital and Filecoin creator Protocol Labs.

Lately, Jay Clayton, SEC Chairman indicated that most ICO tokens are considered as securities by SEC. This implies that companies conducting token sales will have to face regulatory restrictions.

Speaking about the difference between security and utility tokens, Clayton stated, “For example, a token that represents a participation interest in a book-of-the-month club may not implicate our securities laws and may well be an efficient way for the club’s operators to fund the future acquisition of books and facilitate the distribution of those books to token holders.”

In view of this, Andreessen and USV have urged SEC to categorize more ICOs as utility tokens, which do not represent investments.

“In contrast, many token offerings appear to have gone beyond this construct and are more analogous to interests in a yet-to-be-built publishing house with the authors, books and distribution networks all to come,” added Clayton.

According to report, a wide-ranging regulatory immunity for the industry is doubtful, however, the industry may expect slight exemptions that cap the contributions and also block contributors from reselling tokens at a profit.


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