Forbes reporter Laura Shin writes:
As the number of initial coin offerings and the amounts they have raised have spiked to about $2 billion, with the vast majority of that within the last several months, many industry participants have expressed concerns about scams and ill-conceived projects taking money from the financially unsophisticated.
Regulators have started to step in — both gingerly, as in the United States, and harshly, as in China — but crypto and blockchain technology insiders have begun to forge their own efforts at self-regulation.
Monday, the Chamber of Digital Commerce, a trade association for the digital asset and blockchain industry, launches the Token Alliance, which aims to educate, promote and shape the world of crypto assets and token sales.
Its co-chairs have backgrounds that will be of great interest to token issuers: Dr. Jim Newsome, the former Chairman of the Commodity Futures Trading Commission, and Paul Atkins, a former Securities and Exchange Commissioner.
“Our goal is to come up with best practices for those companies interested in ICOs,” said Dr. Newsome, adding that it will meet regularly with SEC staff and commissioners. “What we’ll do initially is provide basic principles about what we know the SEC or CFTC would be concerned about, given an ICO. It’s difficult because there’s not a black and white ICO methodology. These are all very, very different from [utility tokens] to others. What we don’t want to do is create a 1,000-page document that replicates a whole division of the SEC that’s been developed over 50 years, but start out with common sense guidance.”
When asked if teams holding ICOs could get what’s known as “safe harbor” — protection from legal liability for, say, violating securities law if certain conditions are met — by following Token Alliance guidelines, Dr. Newsome said, “We have no expectation we can actually get a safe harbor — I don’t think that’s something they would do, but we hope to get cover from the SEC with regard to the direction that we’re going and the guidance we’ll be giving to our market participants.”
Atkins is likely to play a central role because of his experience as an SEC commissioner from 2002 to 2008. The primary area of regulations token issuers run the risk of violating is securities law. After leaving the SEC, he founded Washington D.C.-based financial services consultancy Patomak Global Partners, which offers guidance on regulatory compliance and enforcement.
“The Token Alliance will serve a much needed role in helping the industry establish for itself appropriate guidance for this new and exciting asset class,” he said in a statement. “I’m thrilled to be a part of this initiative and bring my service as a former securities regulator to help foster this ecosystem.”
The Alliance kicks off with more than 70 blockchain/crypto-focused members including payments company Circle, enterprise blockchain player Microsoft, blockchain identity firm Netki, law firm Perkins Coie, China-based ICO project Qtum, and Overstock’s t0.com.
It plans to make its guidance public and open source so that other industry players, such as those who have successfully completed an ICO and the lawyers for those projects, can add their own thoughts. To begin, it will cover general topics such as disclosure and marketing and later evolve to more specific issues.
Read the full story here.