US Lawmaker Wants To Ban ICOs

While the U.S. Securities and Exchange Commission’s William Hinman said the agency is “striving for a balanced approach” between digital currencies and initial coin offerings (ICOs), a U.S. congressman is taking issue with this line of thinking. U.S. Representative Brad Sherman (D-Calif.) thinks ICOs are detrimental to the economy, CoinDesk reported.

“The reason for securities markets is to provide jobs in the real economy,” Sherman said during a House subcommittee meeting on Thursday (April 26). “An IPO [initial public offering] does that; an ICO does the opposite. It takes money out of the real economy.”

Hinman, who is the director of the agency’s Division of Corporation Finance, did say blockchain technology “may have some promise.” But Sherman clarified that he only wants to get rid of token sales. “I’m not saying ban blockchain; I’m saying ban the ICOs,” Sherman said.

But not all lawmakers at the hearing were critical of initial coin offerings. Rep. Tom Emmer (R-Minn.) called out his colleagues’ “ignorance about how special this area is.” Emmer had previously told CoinDesk that the U.S. needs to avoid overregulation of the cryptocurrency industry.

The news comes as the SEC has been issuing subpoenas by the dozen and scores of information requests as it undertakes a full survey of the tech firms that populate the cryptocurrency field.

The big probe came after a wide variety of warnings from the securities regulator that strongly indicated its opinion that an ICO is, at best, a security in disguise trying to skate past regulations. The subpoenas and information requests specifically sought data on the sale and structure of ICOs, which exploded in popularity in 2017 as a means of raising funds quickly without a lot of regulatory oversight.

“Many promoters of ICOs and cryptocurrencies are not complying with our securities laws,” SEC Chairman Jay Clayton said earlier this year. In another speech, he said he has instructed his staff to be “on high alert for approaches to ICOs that may be contrary to the spirit” of those laws.