Member of the US Congress called for the ban of ICO

The US Congressman called for the banning of Initial Coin Offerings (ICO) during the hearing on Thursday. The proposal came from a member of the House of Representatives from California County Brad Sherman. He made a statement after William Hinman, head of the direction of securities and exchanges in the field of corporate finance, spoke before the subcommittee on the securities and investment markets. Hinman told the committee that his unit "seeks a balanced approach" when it comes to cryptocurrencies and ICO.

 Sherman opposed this position and said that selling tokens is detrimental to the economy.

"The reason for securities markets is to provide jobs in the real economy," Sherman remarked. "An IPO [initial public offering] does that, an ICO does the opposite. It takes money out of the real economy. "

Hinman noted that the blocking technology that underlies the ICO provides great opportunities. Sherman replied:

"I'm not saying ban blockchain, I'm saying ban the ICOs. "

Hinman noted that in the opinion of many tools ICO allows to create companies of a new type - more decentralized and of value. Further, during his remarks, Sherman turned to Bitcoin. He said that "Bitcoin is a security, because it is an investment." This comment is noteworthy in that the SEC has a clearly different position on this issue. In November, Commission Chairman Jay Clayton said that although the ICO tokens are likely to qualify as securities, Bitcoin does not fall under this classification.

"When you depart from the Bitcoin or the Ethereum, and you get into the tokens, the hallmarks become pretty clear," Clayton said in an interview with the Wall Street Journal.

Senior Digital Asset Research analyst Matt Gertler commented on this situation and said that bitcoin does not meet the definition of a security proposed by the Supreme Court.

"The first prong of the Howey Test is an investment of money," he said via email. "Considering that all bitcoin was mined and not sold for money at issuance, it is unclear how bitcoin would satisfy the Howey Test."

Not everything is so bad

However, not everyone at the hearing reacted to ICO in a hostile manner. Representative of the House of Representatives from the State of Minnesota, Tom Emmer, criticized his colleague for "a lack of understanding of how special this sphere is." Emmer's enthusiasm for cryptocurrencies is not news at all. During the discussion of the regulation of the Cryptocurrency and ICO in the US Congress in March this year, Emmer said that it is necessary to avoid excessive regulation of the industry.

At Friday's hearing, Emmer asked Hinman if there could be situations, in which the sale of the tokens would not "be an offer of securities."

"It's hard to implement the primary placement of tokens without offering securities," Hinman said. "This is why the SEC chairman noted that the initial deployment of these products may require compliance with laws or be considered an exception."

Emmer also raised the issue of instrumental tokens, which, in the opinion of ICO supporters, should not be regulated as securities, since they are intended to facilitate the use of a network based on a blockchain, rather than for investment.

"We certainly can imagine a token where the holder is buying it for its utility and not as an investment," Hinman said.

Hinman further suggested that the SEC would take into account all the circumstances surrounding the token, "especially if it is a decentralized network".

" The issues around whether a particular coin offering may be a security are somewhat complex," Hinman told committee chairman Rep. Bill Huizenga (R-Mich.). He went on to say that his division's goal is to "not stifle innovation. "