According to Reuters, the U.S. Securities and Exchange Commission halted an initial coin offering from a restaurant review app after the company did not register it as a security. But the broader answer seems to be that while it depends from case to case, initial coin offerings, at least, are more likely to be scrutinized and held to the same bar as securities offerings.
The SEC is offering some of its most extensive guidance to investors and Wall Street on how to handle the manic craze surrounding cryptocurrencies - warning traders that digital currency will be policed like old-fashioned currency as it grows more mainstream.
"A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are now operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation", the SEC official commented.
In a separate statement discussing the ICO market in general, SEC Chairman Jay Clayton said that although ICOs "can be effective ways for entrepreneurs and others to raise funding, including for innovative project", investors need to remaining highly vigilant.
Regulators have increasing scrutiny of initial coin offerings (ICOs), a key fundraising tool for cryptocurrency fundraising. "Said another way, replacing a traditional corporate interest recorded in a central ledger with an enterprise interest recorded through a blockchain entry on a distributed ledger may change the form of the transaction, but it does not change the substance".
In October, the company began accepting funds from investors in exchange for Ethereum-based MUN tokens, which were to be issued in the future, through a token offering (ICO).
While the statement makes clear that the SEC views the cryptocurrency market as falling under its purview, it remains much more laissez-faire about enforcement than other regulators have been.
In what should be an interesting beginning to the coming avalanche of ICO failures, the SEC has come down hard on Munchee, a company that built a $15 million token sale.
Moreover, the cease-and-desist order indicates that the SEC was not swayed by Munchee's self-serving statements that it believed it was complying with the securities law.
"Please also recognize that these markets span national borders and that significant trading may occur on systems and platforms outside the United States", Clayton said. Munchee Inc. returned proceeds to investors and halted the delivery of tokens.
Unlike the PlexCoin incident - in which the organizers went on a Bonny-and-Clyde-style escapade to evade authorities - Munchee's investors got a refund of all the MUN tokens they bought and the organizers cooperated with the SEC's investigation, helping them avoid a penalty.