13 months after token prices slumped forcing many to bankruptcy, the US SEC appears to be laying down the much-needed ground rules needed to resuscitate an innovation that could shape project financing. Working via the principles of the blockchain, that is complete decentralization, initial coin offering cuts down bureaucracy while simultaneously exposing projects to millions if not billions of interesting projects who can invest in the project in exchange of a utility token.
These new tokens, unlike shares and other representation of assets in traditional setups, issuers often claim are not a representative of the issuing company assets neither is it marketed with the expectation of profits. They do so with the objective of not contravening the US Supreme Court textbook definition of the asset’s classification as specified by the Howey Test.
But the US regulator is not buying this and, in an interview, William Hinman, head of the Division of Corporation Finance said the commission plans to publish a guide that developers and investors can refer to before they settle on what they want to issue or to buy—a security or a token. His comments collaborate those of Hester Peirce who despite being progressive and supportive of innovation sees fit that tokens that are issued via an established and working platform should be viewed as a utility token:
“A group of people get together to build something and they need to find investors to fund their efforts so they sell securities, sometimes called tokens. The SEC applies existing securities laws to these securities offerings, which means that they must be conducted in accordance with the securities laws or under an exemption. When the tokens are not being sold as investment contracts, however, they are not securities at all. Tokens sold for use in a functioning network, rather than as investment contracts, fall outside the definition of securities.”
On the chart, the path of least resistance has been defined. At the time of writing ETH is up 12.6 percent against the USD and a level higher in the weekly chart, there is a conspicuous double bar bull reversal pattern with a marked spike in market participation.
Even so, we shall not get ahead of ourselves because pumping prices are below average volumes—1.48 million against averages of 2.74 million, not even close to 5.7 million of Dec 30 or those of mid-Nov 2018—6 million.
As we can see, bulls have a long way to go and proof that indeed they are in control. Regardless, in the short term, ETH bulls are in charge. Before we ramp up longs, all we need to see is a high volume—exceeding that of Feb 8 at 520k and averages of 203k—bar complementing gains of Feb 8 closing above $135. It is from there that the first wave of bulls stands to propel prices towards $170 or Dec 2018 highs before it paces to $250.
All Charts Courtesy of Trading View–BitFinex
Disclaimer: Opinions are those of the author. Do your Research.
13 months after token prices slumped forcing many to bankruptcy, the US SEC appears to be laying down the much-needed ground rules needed to resuscitate an […]
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