The Future of ICOs: In the Hands of Regulators or Innovators?

A few months ago, via a speech by one of its commissioners, the U.S. Securities Exchange Commission gave a sliver of hope to the viability of tokens.

There is no point rejoicing about that statement because the SEC offered no path to get to that stage, other than to start creating tokens as a security.

To date, the SEC has publicly recognized only two such tokens as not securities: bitcoin and ethereum.

Actual token usage by real users is arguably more pertinent to labelling the role of a token as a non-security, whether the governance is central or not.

The token as a decentralized utility is essentially needed, but not all tokens can be born as a security.

Labeling a token as a security at birth or even during the development and product-to-market fit evolutions restricts their movements, especially the efforts of putting them in the hands of consumers and developers who want to use them.

If all tokens were labelled as securities, then consumers could not easily use them, and that would be a tragedy.

This is an existential position for the future of the ICO and it is intricately tied to the classification of tokens as a new asset class due to its inherently new properties.

Let us not erect so many bumps along that road. I predict that 2019 will be the year where, at least in the U.S., the SEC and the blockchain industry will come head to head. The industry will challenge the SEC's ultra-conservative stance on the looseness of their interpretation of the Securities Act as far as applying them to good ICOs and token use cases.

Let us hope that entrepreneurs and the industry they represent are the ones leading by example, and showing the way to the future of ICOs and the innovative token models they engender.