I'm seriously wondering, though... Have there really been that many ICOs? As an outsider the general impression I get (which I recognize might be completely inaccurate) from most coins is that they're "get rich quick" schemes.
A while back I was trying to read up on Ethereum, and despite their nice landing page and superficial info.... Once I tried digging in further into the actual code and actually running any stuff, it was a horribly confusing mess that made me hesitant to put my trust in them. All their docs and wikis seemed full of outdated links and information.
And when I say plenty of cash, I am talking in the aggregate. I don't make any statements about whether or not it's being correctly distributed.
That's an entirely prescient statement that suggests the SEC has done a serious bit of homework and has put careful thought into the subject.
The easiest counterexample would be Ethereum itself, who had a teenager as its public face, and raised large amounts of funds on top of mostly just a whitepaper, yet turned out to actually deliver all the crazy stuff they promised.
I dunno; I'm still trying to figure out whether it's a great idea or the worst idea. I don't want to have to do a code review on my investments; at large enough scale, lawyers are way cheaper than losing money.
Why on earth would you want this? That's tantamount to replacing the court system itself, and I definitely prefer juries and judges to compilers and debuggers.
I'm just a bystander in all this but I distinctly remember the phrase the code is law bandied about, followed by a hard fork.
Also, "the exception proves the rule" is a misinterpretation of the phrase. "Proves" here means "puts to the test", and the saying means that you can tell whether a rule holds up by seeing what happens when it is tested. Ethereum demonstrated that the rule does not hold up.
However, those institutions are subject to the rule of law, and if you are wrongly treated you can expect restitution.
From my perspective, cryptocurrencies are a sort of wild wild west at the moment where the standard appears to be: if you are wrongly treated good luck!.
We were considering implementing some of our blockchain IPO and corporate governance via a smart contract, but decided to punt on it. It's flashy, it'd help us raise more money, but it just does not seem like a smart idea at the moment. We'll use a basic ERC20 contract to account for who owns shares (and pay dividends) but nothing more involved than that for now.
A proper prospectus:
And how ICO white papers look like:
The people who have written dozens of real papers that end up in a dustbin somewhere are jealous. The funny thing is most of these docs would be more accessible as blog posts, but those don't provide the same faux-academic thing con men need.
Not sure if they're actually that amateur or it's more cynical and they know it's the way you do business - probably both.
Often, it's easy to spot the ones that are doing the faux-academic thing.
I'm not sure if I'm dumb, or its dumb (trinary, whaa?) but I had a really hard time getting through it without rolling my eyes a whole bunch. I still have 77 MegaIOTA, just in case someone ever figures out a use for it.
"And if you believe that then have I got a paper for you..."
It has been recently suggested that the SEC may go after exchanges which hold any ICO token regardless of how it was sold and advertised, I'm pretty sure they don't want to go that far, this will only push exchanges into decentralized systems which are difficult to shutdown. There has to be some give and take on both sides here really.
In the post, I explore what constitutes a security by examining case law and draw comparisons to other means of raising money for companies that are typically outside the purview of securities (gift cards, Kickstarter). Hopefully this helps provide perspective.
The SEC concluded that the DAO was a security, but that they were not going to take action on it. That's within their discretionary authority. They may simply decided that they weren't going to go after this issue retroactively. They've now published some guidance on the subject, so future issuers can't claim there were no rules in that area.
Expect the SEC to go after somebody who does an initial coin offering and converts the money to their own use, without generating any benefit for the investors.
For anyone buying tokens and considering SAFT offerings, this is a good read from a securities lawyer, albeit an English one (not US):
This is also a great post in terms of highlighting pitfalls and challenges: