S.E.C., Catch Up: The Netherlands Breaks New Ground on ICO Regulation

I have worked with more than a dozen token projects in one way or another and while so much has changed in the past year, one thing remains true: everyone is thinking about our friends at the U.S. Securities and Exchange Commission (S.E.C.). This is the case domestically, of course, but the S.E.C. also impacts projects abroad in limiting if sales may be presented to American token buyers.

We’re waiting for clear guidance on how regulatory bodies view these projects. The ambiguity is staggering: the S.E.C. says every crypto token is a security, the U.S. Financial Crimes Enforcement Network (FinCEN) said, through stating ICO issuers are money transmitting businesses in a recent letter, crypto-tokens are money, and the Internal Revenue Service stated that cryptocurrencies are considered property. Yikes.

This week, the United States was beat to the punch when the financial services regulatory authority for the Netherlands, the Authority for the Financial Markets (AFM), offered a new take: not all crypto-tokens are securities.

The letter, to Retailcoins founder Hugo Leijtens:

Op basis van jullie mondelinge toelichting gaat de AFM er op dit moment van uit dat de uitgifte van de Retailcoin niet onder toezicht van de AFM valt. Voor de volledigheid merken wij daarbij nog wel op dat wij dit baseren op de informatie die jullie ons hebben gegeven. Wij gaan er van uit dat jullie ons volledig en juist hebben geïnformeerd. Mocht dit op een later moment anders blijken dan kan de AFM alsnog besluiten om een onderzoek te starten.Voor de volledigheid merken wij ook nog op dat deze e-mail niet inhoudt dat de AFM op welke manier dan ook goedkeuring geeft voor de activiteiten van Digital MKB B.V. en Stichting Digital Retail Foundation.

Translated, thanks to our friends at Google Translate:

On the basis of your oral explanation, the AFM currently assumes that the issue of the Retail Coin is not subject to supervision by the AFM. For the sake of completeness we note that we base this on the information you have given us. We assume that you have fully and correctly informed us. If this proves otherwise at a later date, the AFM can still decide to start an investigation.For the sake of completeness, we also note that this e-mail does not imply that the AFM approves the activities of Digital MKB B.V. in any way whatsoever. and Digital Retail Foundation.

There is a lot of nuance and there are a few important qualifiers but the fact is this is a no-action letter from a major federal agency. As far as I know, this is a first in the world — and that’s a significant win.

But it’s still not enough. As I noted in Observer this week, we need the fine folks in Washington to step up and offer clear definitions. Crypto assets aren’t going anywhere, and the ambiguity is a waste of time for entrepreneurs, token buyers, and the federal agencies themselves.

My name is Andrew J. Chapin. I’m the CEO of Benja, the merchandise ad network, a token advisor (including for Retailcoins, mentioned in this post), and the head of the startup foundry Chapin Labs.

S.E.C., Catch Up: The Netherlands Breaks New Ground on ICO Regulation was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.