In recent weeks, regulators and financial authorities across multiple regions have taken actions regarding blockchain technology and cryptocurrencies. The U.S. Securities and Exchange Commission (SEC) recently underscored that it views cryptographic tokens sold through Initial Coin Offerings (ICOs) or similar campaigns as securities when the funds raised are used to finance the issuer. Therefore, issuers must adhere to relevant securities and capital markets laws. The SEC has also provided an informational guide on its website, emphasizing the “three Rs” of ICOs: Risks, Rewards, and Responsibilities.
SEC Chairman Jay Clayton clarified that the SEC does not plan to amend its rules on cryptocurrencies soon. While bitcoin remains classified as a commodity, the SEC considers all tokens from ICOs—tokens distributed through fundraising campaigns—as securities. While the SEC oversees “security tokens,” the Commodity Futures Trading Commission (CFTC) handles cryptographic commodities, such as Bitcoin, Ether, and other digital assets, within the U.S. The CFTC is actively investigating possible manipulation within crypto exchanges.
This classification impacts crypto-exchanges directly. Exchanges that deal in securities tokens or commodities coins must obtain licensing from the appropriate regulatory body, as trading securities and commodities requires authorization across all jurisdictions globally.
In the European Union, the Austrian Financial Market Authority (FMA) has taken a step to regulate crypto-mining activities by categorizing crypto-mining schemes as Alternative Investment Funds (AIFs). Operating an AIF requires licensing or permissions from relevant financial authorities. Although this AIF classification currently applies only to Austria, it is anticipated that other EU nations may adopt similar measures.
For a quick overview, we have summarized the current regulatory landscape in the graph above. Change is accelerating within the crypto-space, and this regulatory evolution brings encouraging news for investor protection.