No Panic: Cooler Heads Prevail as SEC Casts Shadow on Cooley ICO Event

If anyone was panicking last night at a prominent meetup focused on initial coin offerings and token sales, they certainly weren't letting it show.

Scheduled to begin just 91 minutes after the SEC happened to release a landmark report on the legality of the novel fundraising method, Cooley, the host of the event and one of the sector's leading law firms, abbreviated its program to highlight its bullish view of blockchain and token technology.

In both the panel discussion and the Q&A session, optimism shined through.

Addressing a question about the market implications of the SEC report, Cooley partner Andy Roth told the crowd:

"I would say [the report was] extremely positive... This is part of maturation and legitimization of the space. And so I think it's very positive. And it gives us more concrete guide posts to help clients organize themselves the right way."

In response to the same question, Cooley special counsel Patrick Murck added that he believes the new guidance will provide market clarity – and legitimacy – for a use case of the technology long thought to be fringe.

"If you to want to rewind the clock, and go back to the days of the DAO, when everybody is freewheeling and nobody cares, I guess it would be negative for that type of market. But for a sound market — that actually has a future — I think it's net positive," he told the audience.

Prior to joining Cooley, Murck previously served as the executive director of the Bitcoin Foundation, Bitcoin's earliest non-profit advocacy group.

Investors confident

The sentiment among the audience, which included cryptocurrency investors, lawyers, and developers, generally reflected the optimistic tone of the panel.

James Robinson IV, an investor in blockchain startups Chain, Ripple, 21 Inc, and BitPay, was one attendee who took this tone, calling it a "net positive."

"Defining the goal posts is important. Where you have uncertainty, anything that gives guidance is by definition positive," he told CoinDesk.

Still, he foresees the extent of any impact as fundamentally limited given the size of the addressable market.

Robinson added, in a more cautious coda:

"On the other hand, we're living in the 21st Century. Digital boundaries are not physical borders. And it's very difficult for the SEC to regulate a server setup in Switzerland."

Regulatory reaction

Among people familiar with the regulatory community, attendees largely agreed the formal government guidance marked a significant positive milestone for the developing technology.

Jeff Bandman, a former Cravath, Swaine & Moore attorney who also served as special counsel to the chairman at Commodity Futures Trading Commission, for example, saw it as a notable milepost.

"It's a Digital Marbury v. Madison, in the sense that the SEC is asserting that ICOs are a security, which has important implications."

Bandman, who is now Principal at Bandman Advisors, also provided additional color around the market implications of the report:

"I think it's a positive. It's a step in the maturation of these markets. The capacity for capital formation here is truly eye opening. Investors have greater confidence when there is legal certainty."

In reference to the ambiguity surrounding the emerging distinctions in the token and cryptocurrency space, Bandman added, "This wasn't a one-size-fits-all solution. The facts and circumstances matter."

The facts and circumstances Bandman alluded to will likely include emerging distinctions around when a token is considered a security, and when it functions as a 'utility coin', a kind of consumer credit that can be exchanged for network goods or services.

Disclosure: James Robinson IV is an investor in Digital Currency Group, the parent company of CoinDesk

Image via Ash Bennington for CoinDesk