US Brokerage Petitions SEC to Get Moving on ICOs


A US-Based brokerage firm has made a formal request, filing a petition to the Securities and Exchange Commission (SEC) to propose rules to regulate the ICO sales phenomenon.

From the petition:

Ouisa Capital has filed the attached petition for rulemaking with the U.S. Securities and Exchange Commission (“SEC”) asking the SEC to publish a concept release followed by proposed rules on the regulation of digital assets and Blockchain technology.

Ouisa is registered with the SEC and FINRA as a broker-dealer and is the operator of an alternative trading system (“ATS”) that uses Blockchain technology. Ouisa is very familiar with the regulatory challenges faced by fintech firms that are issuing and trading digital assets and using Blockchain technology. The petition asks the SEC to provide guidance to the fintech industry on when digital assets will be deemed securities and when the firms that facilitate the trading of digital assets must register as a broker-dealer, an ATS, or an exchange.

The petition for rulemaking also asks the SEC to consider adopting a regulatory sandbox, an approach to the regulation ofdigital assets that is being used in the United Kingdom and Singapore. Ouisa believes such an approach is similar to the approach adopted by the SEC for the regulation of crowdfund investing portal inthat itrequires such portals to either register with the SEC as a broker-dealer or to register with FINRA as a crowdfunding portal that can only engage in a limited number of activities.

As the author of this article wrote recently in Venturebeat:

The U.S. Securities and Exchange Commission has put up a major roadblock to innovation by not addressing the new phenomenon of Initial Coin Offerings(ICOs) and providing no regulatory framework for them to exist, thus stagnating U.S. Blockchain developments.

While Singapore and Switzerland are starting to swing open the doors as the only two jurisdictions in the world where tokens are treated as an asset and not as a security, the SEC is dragging its heels, which is not good for American innovators who want to raise funds using these unique financial instruments or for Europeans and Asians who want to open up to U.S. investors.

Some European ICOs are even IP-blocking Americans from participating due to the potential legal implications; and that’s not great for American investors.