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SEC to regulate virtual tokens

Added on 27 July 2017 - 0:52 'Viewed 37 views times.

The virtual tokens, or coins, issued by some companies instead of traditional stock shares will be regulated like any other security, the Securities and Exchange Commission said on Tuesday.

The SEC, in an investigative report, focused on a virtual organization called the DAO, which issued virtual tokens last year in an IPO-like process.

The new SEC rules come after hackers stole a third of investors ’ money in June 2016 — exposing the vulnerabilities of the relatively new asset.

“We seek to foster innovative and beneficial ways to raise capital, while ensuring — first and foremost — that investors and our markets are protected,” SEC Chairman Jay Clayton said in a statement.

“The SEC is saying, ‘We ’re not trying to stifle innovation, but we ’re not embracing innovation for its own sake, ’” Greg Nowak, a partner at Pepper Hamilton, told The Post.

“This report shows that the SEC is ready and willing to regulate, and that if it walks like a duck and it talks like a duck, it doesn ’t matter if it ’s on a blockchain,” said Elizabeth Stark, CEO and cofounder of Lightning Labs.

The DAO ’s business model was similar to a venture capital fund. Investors used virtual currency to buy DAO tokens in the hopes of future dividend-like payments. The DAO was valued at $150 million.

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