On Thursday, April 26, a hearing entitled “Oversight of the SEC’s Division of Corporation Finance” took place where an official from the U.S Securities and Exchange Commission (SEC) said that there should be a “balanced approach” while dealing with ICOs.
The director of the SEC’s Division of Corporation Finance – William Hinman said that the digital currency sector and ICOs continue to evolve. He said: “We are striving for a balanced approach, and one that ensures capital formation while maintaining a strong focus on investor protection.”
The hearing was conducted to discuss the possible reasons for the falling number of ICOs taking place in the country. Bill Huizenga, a member House Financial Services Committee countered Hinman asking Whether ICOs could to be a solution to this decline and whether they should be regulated.
In response to this Hinman said: “in theory, there is a time when a coin may achieve a decentralized utility in the marketplace, or […] there may be coins where that lack of a central actor may make it difficult to regulate.”
Hinman carried his discussion on the same line of the SEC chairman – Jay Clayton – who said that ICOs should be treated as securities. Hinman also said that the SEC would be consulting with businesses and entities carrying out token sales and verify whether the offerings are regulated or not.
Brad Sherman (D-CA), a committee member disagreed on the idea that ICOs should replace IPOs. He said that IPOs in fact create jobs in the economy while ICOs do the opposite. He said: “It takes money out of the real economy, it takes people willing to invest and risk, and says ‘don’t use that ability to risk, don’t use those animal spirits to help create a job for a person who needs one, let alone build a factory for thousands, sit there and trade back and forth in the ICO.’”