On October 13, TuongVy Le, a former SEC official who now works as a current partner and Head of Regulatory and Policy at BainCapCrypto, emphasized the progress of crypto crowdfunding via Twitter.
Back in 2017 when I started working on crypto @SECgov, we saw mostly ICOs that looked like IPOs: teams selling tokens to the public to raise money to build protocols or apps that didn’t exist yet, w/ little to no disclosures so the public could know what they were getting into.
— TuongVy Le🗽 (@TuongvyLe12) October 13, 2022
As she reflected on the past, she emphasized that the SEC viewed ICOs as initial public offerings (IPOs) in which teams sold tokens to the public to raise money to develop protocols or apps that were not yet available. The public had little to no disclosure about what they were getting into or doing. Since they have authority over IPOs, the regulatory body, the SEC, has taken action against numerous cryptocurrency projects, alleging that they exposed investors to significant risks through little information disclosures for gain. A recent example is a case between the SEC and Ripple.
According to the SEC, the Ripple platform sold unregistered securities in the form of XRP tokens. Ripple asserted that XRP should be regarded as a cryptocurrency because it does not meet the Securities Act’s definition of an investment contract.
Eventually, the dispute between Ripple and the SEC will be addressed. If a judge decides that XRP qualifies as a security, the SEC will have a solid reason to pursue other blockchain platforms.
TuongVy Le’s Twitter thread reveals her stance on these regulations. She applauded the progress made in the crypto niche, describing it as a vibrant ecosystem with many different active protocols, layers, apps, and DAOs.
She further emphasized the functionalities of tokens. They include;
- A reward for taking part in the upkeep of a decentralized public ledger by monitoring transactions, confirming activity, casting votes, or resolving computations to validate transactions;
- A means by which customers on that network can pay for goods or services or by which those individuals who provide services are compensated;
- A representation of value based not on some centralized team efforts but market forces;
- Participation in governance or access to exclusive benefits;
- A reward for assisting in defending the network against cyberattacks through staking
- It can be a unique digital representation of art.
After the thread, the ex-SEC employee took shots at SEC that insistently use the Howey test to determine whether a transaction qualifies as an investment contract. She said that instead of putting this fantastic new technology in jeopardy, they should reflect on how far it has already come.