2017.07.2522:49:00UTC+00SEC Says Digital Coin Offerings May Need Federal Regulation

The U.S. Securities and Exchange commission said that offers and sales of digital assets or currencies by “virtual” firms or institutions known as initial coin offerings (ICOs) or token sales- can be deemed as securities and may be subjected to traditional federal regulation.

The main Wall Street regulator's report comes from a probe it conducted in reaction to a sale of tokens by The DAO, which is a decentralized autonomous organization that use distributed ledger of blockchain technology to operate. While The DAO raised $150 million as of late last year, an unnamed hacker later moved $60 million of the tokens into another account.

No civil charges were brought by the SEC against the virtual organization, but is now using the incident as a cautionary story for the market.

ICOs have become a godsend for digital currency traders by enabling them to raise millions at a fast pace by generating and selling digital tokens without being subjected to proper regulatory monitoring.

However, SEC has declared that the tokens can be considered as securities and thus may need registration in the absence of a valid exemption.