SEC Ruling on the DAO and ICO, Explained

On July 25, the stock exchanges commission announced that blockchain firms should obey state rules. The SEC declared that sales and offers of current assets by implicit firms are subject to the demands of state securities rules. Such purchases and offers controlled by firms using blockchain technology and supply records have been named among other things like token sales.

The announcement confirms that matters of a blockchain built securities and supply ledger must record sales and offers of such securities unless a legal exemption applies.

DAO Incident

The decentralized autonomous organizations (DAO) was a suburbanized progress fund created on Ethereum. In April 2016, the initial coin offer (ICO) raised about $150 million in Ethereum. More than 10,000 individuals invested in the plan. Later in June, some hackers utilized the code issues and made out with almost $60 million. As a result, so many individuals were left with nothing.

The initial coin offer idea itself has faced a lot of issues, as a lot of people think it’s just a clear way to inflate funds, even if it has been. The occurrence revealed that laws and regulations should be constructed and applied according to the security exchange commission.

Market and Community

After the security exchange commission announcement, top five cryptocurrencies aligned with the price, although it was not substantial. Ethereum dropped down with almost 10% but later went back to its other amount.

The market vivacity might have led to the result rather than the security exchange commission report. Some people think that the report disputes every idea of decentralization from happening.

SEC Ruling on the DAO and ICO

SEC’s Decision

The report of the security exchange commission encourages firms to enroll with the SEC. In other cases, if a symbol is not a security, but only has a real usage, the initial coin offer might not have to enroll with the security exchange commission since that would not automatically be identified as an investment.

The enrollment can give more legality to blockchain firms. The security exchange commission has robust laws, so if a firm is enrolled, it would mean it has a principal aim. Professionals from the security exchange commission are prepared to examine blockchain ideas and try to minimize the amount of any con jobs. Furthermore, it may mitigate cost leaps and chase away a lot of racketeers.

 Not all firms have the ability to adhere to the security exchange commission rules. The number of beginners can drop down. In spite of a great idea, excellent planning, and a smart team, some plans can never succeed.


 Understanding the work of the security exchange commission is the great importance to fully apprehend current and future securities regulations. The security exchange commission aims to protect firms and investors, maintain order, efficient and fair markets and facilitate capital formation. Blockchain firms are motivated to join the commission and obey the strong rules and regulations for them to be protected. Mostly the commission controls the value of specific cryptocurrencies in the market.