Consequently, KiK is conducting a crowdfunding operation to help fight against the SEC. KiK is a messaging app; so you may naturally wonder what it has to do with the regulator. This platform also has its own native token. They conducted an ICO successfully in 2017. However, within weeks, the SEC issued regulations warning that ICOs may constitute illegal securities offerings. Unfortunately was among the wave of subpoenas the SEC sent to crypto projects last year.
KiK, a freeware instant messaging app from the Canadian Company KiK Interactive, will take on the SEC in an attempt to challenge regulatory measures by the US regulatory agency. No doubt, the inevitable battle between crypto developers and regulators across the world is picking up. The idea of decentralization was at collision course with the traditional centralized oversight in mainstream finance.
To add insult to injury, the SEC later notified KiK that it would be pursuing enforcement action against the company for allegedly violating US securities laws. SEC chair Jay Clayton takes the view of crypto as securities and this is no surprise.
“I believe every ICO I’ve seen is a security. I want to go back to separating ICOs and cryptocurrencies. ICOs that are securities offerings, we should regulate them like we regulate securities offerings.”- Chair Clapton.
The $5 Million Campaign
Kik is therefore in the midst of a crowdfunding operation to fully take on the SEC. The campaign, under the banner of ‘defend crypto’ seeks to ensure just that. Their website supports donations in 16 different cryptocurrencies and has caught momentum. The funds will be basis of a legal case to push regulators to change their criteria for determining securities. This test is known as the Howey test.
Kik released the following statement to explain the fundraising effort:
“After months of trying to find a reasonable solution, Kin has been unable to reach a settlement that wouldn’t severely impact the Kin project and everyone in the space. So Kin is going to take on the SEC in court to make sure there is a foundation for innovation going forward.”
The Crypto-Securities Debate
Overly, Kik are of the view that cryptocurrencies are not securities and should all be exempt from the stipulated laws. This is because to them, the currency functions of cryptocurrencies make them distinct from securities.
Accordingly, the bigger question is perhaps whether cryptocurrencies are actually currency. This is the undoubtedly the bone of contention and how courts interpret it will be consequential to the future of crypto.
On the other hand, the Howey Test for Securities applies when buying coins or tokens is an investment of money, a common enterprise or there is an expectation of profits through the efforts of others. The challenge for Kik is to prove therefore that their tokens don’t fall under these categories. Needless to say, this could be a protracted battle. Whatever the outcome, it will certainly have immense implications for the future of crypto.