Crypto Frontline

The US financial agencies had been pretty active in the last few months in terms of cryptocurrency, ICOs, and digital assets involvement. Even though up until now the SEC had been the most vocal and active, the Commodities Futures Trading Commission is very close to it.

Last month the SEC had launched a fake ICO website, called, Howeycoin, in an attempt to show ICO investors how a scam looks like. The SEC had also announced recently some of the coins might be treated as securities, saying that Ethereum and Bitcoin might be excluded because of their high level of decentralization.

However, not all the coins are due to be treated as securities. Some of them also called as utility coins might come under the jurisdiction of the CFTC. Because of that, the agency had issued a small document containing a few guidelines for those people wanting to invest in ICOs.

Briefings from the document

According to the document, which can be found here, the CFTC is:

„Alerting customers to exercise caution and conduct extensive research before purchasing digital coins or tokens, including those self-described as “utility coins” or “consumption coins.” Understand what rights are attached to the coin or token being sold, and what underlying factors could affect its value. Be especially wary of promises or guarantees of future value.”

The agency warned that the market is still “very young” and there are no standards for determining the value of a particular asset. The main ICO vulnerabilities had been exposed in the document, in an attempt to make investor do an extensive research and carefully consider before deciding to invest in blockchain-based startups that conduct ICOs.

Same as the SEC, the Commission warned that companies promising returns on their investments, as a share of the future profits, are deemed to fall under the securities law. The document also emphasized that some coins could be derivatives or commodities, based on how they are structured.

A list of factors that may influence the value of tokens can also be found in the document. We must clarify the fact that the CFTC does not want to discourage ICO investments, but wants to make sure these investments decisions are done in a proper way and also, that the companies behind them comply with the regulation. The reason for that had been the high level of bad performances posted by a lot of companies that had conducted ICOs until now.