According to two major media outlets, almost a month ago big money venture capitalists and law firms met with officials of the US Securities and Exchange Commission (SEC) in secret. This year, the SEC has been particularly active, resulting to individuals that have a keen interest in projects and pet coins to advocate for special protection from the agency. The brunt of the advocacy was done towards a “safe harbor” for Ethereum.
The venture capital working group is an ad hoc association that consist of Andreessen Horowitz, Union square Ventures alongside top law firms such as Cooley, Perkins Coie and Mcdermott Will & Emery. The group was formed to influence what some see as inevitable regulation.
The SEC has recently made much noise on a weekly basis with regards to virtual currencies and related activities. The debate continues by players of the virtual currency sector as to whether to embrace regulation or maneuver round them by going underground.
“Group of venture capital firms with investments in digital currency-related companies has asked the SEC for a safe harbor from securities laws for certain projects,” according to an online political journal Politico.
The SEC is said to have received a 50 page note by Perkins to tackle the issues at hand. The note details “argues that while certain digital tokens sold to select investors before wider availability may qualify as securities, they should be granted protection from regulations once they are used for a non-investment purpose”
Many observers believe that the weight of legal implication could potentially end a virtual currency coin or token if the SEC designates it as “security”. Many expensive lawyers will be required for compliance. In efforts to protect what Politicio calls “no action letters”, the working group’s desire is to push for some coins they view are objectively not securities.
Evidently, top among the working groups’ worries is Ethereum the second most famous virtual currency by market capitalization. The group’s argument to the SEC regarding Ethereum states that “is a good example of this type of protocol token that has become so decentralized it should not be deemed a Security”.
A great many future projects built on ether might be sidelined if any ‘security’ tag is attached to ether, says a Newsbitcoin.com report. To remedy the uncertainty and confusion in this space
With the initial coin offerings (ICO), Ethereum has been credited (or accused) with causing the rising interest in crowdfunding.