Investor Tim Draper Calls on SEC to 'Grandfather' ICOs Into Compliance

Investor Tim Draper penned an open letter to the SEC today asking for the agency to carve-out exemptions for certain ICOs.

Jul 26, 2017 at 7:04 p.m. UTC
Updated Sep 13, 2021 at 6:46 a.m. UTC

Investor Tim Draper is calling for the US Securities and Exchange Commission (SEC) to exempt certain initial coin offering (ICO) projects from the repercussions of its ruling that tokens can be captured under its definition for securities.

In a Facebook post today, Draper thanked the SEC for its guidance, but sought to call on the agency to make exemptions for projects that have issued or will issue tokens before October 30, arguing this would be "in the spirit of clarity and encouraging innovation."

Famed for purchasing nearly 30,000 bitcoins at auction in 2014, Draper has been among the earliest and most vocal supporters of bitcoin and blockchain innovation. As such, it was perhaps not surprising when Draper invested was again one of a few early investors in decentralized projects seeking funding by use of the method.

In the post, Draper goes on to recommend a series of factors the SEC should consider so as to send the right message to innovators he fears may otherwise relocate to other jurisdictions.

Draper recommends:

"1. If the purpose of a token is for investment, it must register with the SEC.

2. If the purpose of a token is for societal transformation, and all proceeds go to the support and development of the token, it need not register.

3. If the purpose of a token is to raise money for a company, and the money is used to support the company, it must register with the SEC."

Draper's investments in the nascent sector have so far included a self-governing blockchain project (Tezos), a liquidity mechanism for smart contracts (Bancor) and a decentralized tool for fighting email spam (Credo).

Image via Dan Cawrey for CoinDesk

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
Japan’s Nomura Said to Launch Crypto Unit With DeFi and NFTs on Menu: Report

The Japanese investment bank carried out its first cryptocurrency derivatives trades last week.

The Japanese investment bank carried out its first cryptocurrency derivatives trades last week.

2
Morgan Stanley Says NFTs Next to Watch After UST Collapse

Most speculative and leveraged areas of crypto markets now in focus, the bank’s analysts said.

Most speculative and leveraged areas of crypto markets now in focus, the bank’s analysts said.

3
Bitcoin Sees Seven Straight Weeks of Losses For the First Time

Fears of inflation and poor macroeconomic sentiment have caused bitcoin to fail as an inflation hedge in recent weeks.

Fears of inflation and poor macroeconomic sentiment have caused bitcoin to fail as an inflation hedge in recent weeks.

4
Crypto Hedge Fund Elwood Closes $70M Funding Led by Goldman Sachs and Dawn Capital

Dawn Capital co-led the Series A alongside CommerzVentures, Barclays, Galaxy Digital Ventures and BlockFi Ventures.

Dawn Capital co-led the Series A alongside CommerzVentures, Barclays, Galaxy Digital Ventures and BlockFi Ventures.