According to the notice, the regulator considers IEOs to be similar to initial coin offerings (ICOs), many of which the agency has been investigating as unregistered securities offerings for the past several years. While IEO providers may claim their sales are different from ICOs, they may still violate federal securities laws, the SEC said. As such, the agency warned investors to “be cautious” if they are considering investing in an IEO.
The U.S. Securities and Exchange Commission has published its first warning against initial exchange offerings (IEOs) Tuesday.
“IEOs are being touted as an innovation on ICOs because they are offered directly by online trading platforms on behalf of companies – usually for a fee – to provide immediate trading opportunities for the digital assets,” the notice said.
However, the SEC took aim at crypto exchanges directly, noting they “are typically not registered with the SEC” and “may improperly refer to themselves as ‘exchanges.'”
The SEC warned a platform saying it is registered does not necessarily mean it is actually registered with the agency, and it emphasized that “there is no such thing as an SEC-approved IEO.”
Regulated Exchange Launches in US With Crypto-Backed Visa Card Offering
A FinCEN-registered crypto exchange has launched with its own debit card that allows holders to pay for goods and services with digital assets.
Utah-based CoinZoom announced Wednesday it would begin onboarding new institutional and retail clients, and will offer a Visa payment card that instantly converts cryptocurrencies into U.S. dollars.
As a registered money service business with FinCEN in most U.S. states and territories, CoinZoom has to comply with local regulations, including those concerning consumer protection and know-your-customer (KYC) requirements. The exchange is also licensed as a money transmitter in the U.S., as well as a digital currency exchange in Australia.
CoinZoom supports most prominent cryptocurrencies, such as bitcoin (BC) or ether (ETH), in pairs with the U.S. dollar, providing a fiat gateway into the asset class. The platform also includes a staking facility for selected proof-of-stake (PoS) coins, which provide rewards for holders.
The exchange, which already has a trading app available for Apple iOS devices, can also be used as a remittance solution, according to CoinZoom founder and CEO Todd Crosland.
“CoinZoom is not only the first U.S. cryptocurrency exchange to provide a Visa card to its customers, but also offers … industry-first features like ZoomMe, CoinZoom’s free Peer-to-Peer crypto and fiat payment system,” he said
Last year, U.S.-based cryptocurrency exchange Coinbase, which is also a registered MSB with FinCEN, released its own Visa-backed debit card, but only for users based in the U.K. and European Union. The exchange announced Tuesday it had newly integrated the Coinbase Card with mobile payment provider Google Pay.