2018 will see tremendous government activity to try and regulate ICO fundraising and cryptoassets in general. With dozens of subpoenas issued yesterday by the Securities and Exchange Commission, we should begin to see the posture the US government will be taking moving forward and the specific legal concerns they will be highlighting.
“The wave of subpoenas includes demands for information about the structure for sales and pre-sales of the ICOs, which aren’t bound by the same rigorous rules that govern public offerings.” (WSJ) It would appear that this first round of investigations is focused on the usage of SAFTs (Simple Agreement for Future Tokens) that are similar to Simple Agreements for Future Equity that are common in early-stage startup investment. The SAFT could be considered as trading in a security even though the transaction isn’t being submitted to the same restrictions and considerations of a typical security.
The recent $850 million Telegram pre-sale used SAFTs for its 81 investors which could concern the SEC if those rights are flipped at the token sale for a quick profit or are being traded before the sale. If the SEC comes down hard on SAFT agreements, this flexible tool could become unusable or much more expensive to implement.