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The legality of ICOs

Updated: Nov 13, 2018

When it comes to the ICOs legal state, it's a bit confusing. In supposition, tokens are sold as digital products or goods, and not financial assets. Most countries have no regulations guiding ICOS yet, and everything about it is paperless.

All the same, some jurisdictions are already aware of ICOs and are working on regulating them just like the sales of shares and securities.

In December 2017, the U.S. Securities And Exchange Commission (SEC) classified ICO tokens as securities. The Securities And Exchange Commission was planning to halt all ICOs that are considered misleading investors.

In some cases, the token is just a utility token. What this means is that the owners can only use it to access some specific networks and may not be defined as something of financial security. On the other hand, those tokens whose aim is to appreciate e.g., equity token, are more or less close to the concept of security. The truth is that most token purchases are explicitly made for purposes of investment.

In spite of the unrelenting efforts of the regulators, ICOs are still persistent in some legal areas, and until a clearer picture of regulations guiding ICOs is drafted, the entrepreneurs will continue to benefit from the Initial Coin Offerings.

It is worth mentioning that the moment the ICOs are regulated by the authorities, they will be less attractive to the investors because of the effort and cost to comply with this regulation.

For the time being, ICOs has come to stay and remain a remarkable way to fund new crypto-related projects, and this has recorded excellent success over time. Also, keep in mind that everyone is launching many ICOs projects and most of these projects are scams. For this reason, you should investigate and do proper research before investing in any crypto project.

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