On October 10, Decrypt Media reported that the SEC has been pressuring ICOs to pay back their investors or face prosecution. In fact, dozens of ICOs have relented to the SEC’s pressure giving back money to investors and paying fines on top of that.

While the SEC continues to throw the centuries-old book at American startups, in the Middle East, meanwhile, governments have taken a different approach. The United Arab Emirates is embracing ICOs with loving arms, creating a new regulatory framework that makes it a hell a lot less confusing for companies thinking of raising money via the token model. While these approaches are different, they raise the same question: is the end nigh for ICOs or is it the dark before the dawn of a beautiful new tokenized era? Opinions, as you might expect, are divided.

General counsel and CCO of crypto exchange Huobi, Josh Goodbody, tells Decrypt this sudden increase in volume was a challenge for the regulators but he welcomes the “effective and proactive” steps they have been taking.

“What we are seeing is a re-balancing of previous industry wide exuberance. We are moving towards a better regulated and more consumer friendly ICO market which we see as a positive and more sustainable way forward for the industry,” says Goodbody.


When it comes to specific regulation on ICOs however, Goodbody, is sitting firmly on the fence. He argues that it can be a sensible way to fill a regulatory vacuum, but only if existing regulations can be applied in sensible manner. He says it falls to the SEC to be decisive and that it needs to create regulatory certainty, in order to help develop the ICO industry.

David Siemer, founder of venture fund Wavemaker Partners and CEO of crypto investment fund Genesis, has the opposite view. He says the SEC not issuing new regulations has made it harder for ICOs in the US and puts the industry at risk.

“Projects raising in the US are not only having a difficult time raising funds given the current environment, but they also have to deal with the short-term consequences of low liquidity, given longer lock-up periods and nascent security token infrastructure."

Siemer believes the investigation shows it will not be issuing any crypto-specific guidelines any time soon. He suggests ICOs can either follow existing US securities laws or move overseas, adding that companies in the Genesis portfolio are increasingly raising capital exclusively outside of the US.


"As more projects continue to raise abroad, Security Token Offerings (STOs) could offer some hope to save the US crypto market," he says.
While the UAE and SEC are both taking decisive approaches, they are moving in vastly different directions. ICOs are a big business--some $6.3 billion was raised last year-- and it appears the US is beginning to lose out on this new cash. Is the SEC protecting consumers or shooting itself in the foot?

Read Next: Tough but fair. 

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