Ohio lawmaker eyes bill allowing ICOs to ‘sidestep’ securities laws
A congressman in Ohio is preparing a bill that will regulate initial coin offerings (ICOs) in the same way as any other product as a means of “sidestepping” U.S. securities laws, according to a Washington Examiner report.
Republican Rep. Warren Davidson, of the 8th district of the state of Ohio, is reportedly weighing up a prospective bill which would treat ICOs as a type of product, rather than a form of security, thereby reducing the influence and oversight of the Securities and Exchange Commission (SEC).
The bill would aim to apply at both state and federal level, which would allow companies to avoid engaging with securities laws when launching ICO projects.
While Davidson is reported to be seeking bipartisan support, local media reports suggest this is unlikely, in light of the number of incoming Democrats into the House of Representatives, who would be expected to vote against deregulatory proposals.
Nevertheless, the bill would complement the recent tendency of crypto and blockchain firms to turn to venture capital (VC) funding rather than ICOs, in a bid to circumvent the complexities of securities laws and the increasingly stringent oversight of the SEC.
From the beginning of the year, SEC Chairman Jay Clayton has led the regulator through its initial attempts to enforce securities laws on ICOs, after suggesting that every ICO the regulator had ever seen could be defined as a security.
While several commissioners have sought to soften the position since, the proactive enforcement of the SEC is reported to have driven companies away from the ICO model, with private equity being used to raise funds without the same regulatory burden and legal uncertainty.
If the bill becomes law, it would allow crypto firms to use ICOs without concern for the SEC’s definition of ‘securities’, delivering more flexibility to companies choosing to use the ICO funding model, rather than pursuing alternative routes to capital.
The proposals come a matter of weeks after Davidson hosted some 45 delegates from the cryptocurrency and financial sectors, as part of a ‘crypto roundtable’ to discuss regulatory issues.
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