{"id":22237,"date":"2018-04-20T21:39:40","date_gmt":"2018-04-20T21:39:40","guid":{"rendered":"http:\/\/ci027cfe79800c2697"},"modified":"2018-04-20T21:39:40","modified_gmt":"2018-04-20T21:39:40","slug":"venture-capital-working-group-seeks-select-cryptocurrency-safe-harbor","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/business\/venture-capital-working-group-seeks-select-cryptocurrency-safe-harbor","title":{"rendered":"\u201cVenture Capital Working Group\u201d Seeks Select Cryptocurrency \u201cSafe Harbor\u201d"},"content":{"rendered":"
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Several venture capitalists (VCs) and entrepreneurs have been petitioning federal authorities to see certain virtual currencies in a \u201cdifferent light.\u201d<\/p>\n

Right now, many cryptocurrencies are in danger of being classified as \u201csecurities,\u201d which would place them under strict regulatory scrutiny. Working to change this, venture capital firms Andreessen Horowitz and Union Square Ventures have gathered a team of lawyers and investors known as the \u201cVenture Capital Working Group\u201d to meet with the U.S. Securities and Exchange Commission (SEC) to develop what they call a \u201csafe harbor<\/a>\u201d for specific digital currencies and establish long-term proposals for how they should be viewed and handled. <\/p>\n

The New York Times<\/a> alleges that several regulators are considering placing well-known cryptocurrencies \u2014 including ether, the world\u2019s second-largest digital asset \u2014 in the securities category, which may cause their prices to fall drastically. <\/p>\n

Richard Levin, a lawyer who\u2019s worked with various blockchain and cryptocurrency ventures, described the meeting as \u201ccrucial\u201d to the safety of digital assets and their respective users. <\/p>\n

\u201cIt\u2019s a \u2018come to the lord\u2019 moment,\u201d he explained. \u201cWe are seeing a watershed moment in which many firms in the digital asset community who may have been ignorant of the law \u2014 or poorly informed \u2014 are now coming to terms with the fact that they are subject to regulators.\u201d <\/p>\n

While details surrounding the meeting remain largely confidential, the group says it\u2019s trying to garner \u201cutility token\u201d classifications for many specific cryptocurrencies.<\/p>\n

Many virtual entities have been introduced through initial coin offerings (ICOs). The process involves a team of entrepreneurs selling these virtual assets to raise funds for future projects. Generally, these currencies work as \u201cinternal payment methods\u201d in the software the entrepreneurs create. <\/p>\n

For a coin to classify as a security<\/a>, users who buy it must have the opportunity to transform money into capital and garner profit by owning the asset without taking physical possession of it. <\/p>\n

Securities are typically designed to be \u201cshares\u201d or stakes in a company, while utility tokens represent \u201caccess to [a] company\u2019s product or service.\u201d In bearing more practical uses, utility tokens are usually exempt from securities regulations. <\/p>\n

Since 2017, over $6 billion in revenue have been generated through initial coin offerings, and most trade via unregulated exchange platforms. Many investors claim that these coins, in serving as payment methods, carry utilities, and should not be classified as securities or investment contracts. <\/p>\n

But Jay Clayton \u2014 chairman of the SEC \u2014 disagrees, and believes every token offered through an ICO should be officially \u201cregistered as a security.\u201d Very few are, and the SEC has sent dozens of subpoenas to both individuals and ventures involved in cryptocurrency, requesting data regarding how certain digital assets were marketed or issued. <\/p>\n

Investments that fall into the securities category must have paperwork filed with registered exchanges. For the most part, entities like bitcoin, litecoin and monero can\u2019t be placed here, as they were not originally distributed through ICOs. Furthermore, new coins are given daily to computers that work to extract them and maintain current networks.<\/p>\n

While ether now follows a similar pattern, the coin is still in danger, primarily due to Ethereum\u2019s past of garnering funds through ether token \u201cpresales\u201d \u2014 events now classified as ICOs. The Venture Capital Working Group is arguing that ether \u201chas become so decentralized,\u201d it should not be labeled as a security, and that should it ever achieve \u201cfull decentralization,\u201d it must be exempt from all future securities laws. <\/p>\n

The group says it has the support of many \u201ckey players<\/a>\u201d in the digital currency and blockchain arena. Nevertheless, regulators have been slow to accept the proposal, and at press time, it is unclear what results will arise. Bitcoin Magazine will provide further updates on this story as they occur.<\/p>\n","protected":false},"excerpt":{"rendered":"

Several venture capitalists (VCs) and entrepreneurs have been petitioning federal authorities to see certain virtual currencies in a \u201cdifferent light.”<\/p>\n","protected":false},"author":3479,"featured_media":22238,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[1505,183],"class_list":{"0":"post-22237","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-new-york-times","9":"tag-sec"},"author_data":{"id":3479,"name":"Nick Marinoff","nicename":"nick-marinoff","avatar_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/12\/cropped-bitcoin-schmitcoin-promo-image-1-2-96x96.png"},"featured_image_url":"https:\/\/bitcoinmagazine.com\/wp-content\/uploads\/2024\/11\/venture-capital-working-group-seeks-select-cryptocurrency-safe-harbor.jpg","_links":{"self":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/22237","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/users\/3479"}],"replies":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/comments?post=22237"}],"version-history":[{"count":0,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/posts\/22237\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media\/22238"}],"wp:attachment":[{"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/media?parent=22237"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/categories?post=22237"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitcoinmagazine.com\/wp-json\/wp\/v2\/tags?post=22237"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}