S.E.C., Catch Up: The Netherlands Breaks New Ground on ICO Regulation

I have worked with more than a dozen token projects in one way or another and while so much has changed in the past year, one thing remains true: everyone is thinking about our friends at the U.S. Securities and Exchange Commission (S.E.C.). This is the case domestically, of course, but the S.E.C. also impacts projects abroad in limiting if sales may be presented to American token buyers.

We’re waiting for clear guidance on how regulatory bodies view these projects. The ambiguity is staggering: the S.E.C. says every crypto token is a security, the U.S. Financial Crimes Enforcement Network (FinCEN) said, through stating ICO issuers are money transmitting businesses in a recent letter, crypto-tokens are money, and the Internal Revenue Service stated that cryptocurrencies are considered property. Yikes.

This week, the United States was beat to the punch when the financial services regulatory authority for the Netherlands, the Authority for the Financial Markets (AFM), offered a new take: not all crypto-tokens are securities.

From the founder of Retailcoins:

Based on the information that we shared with the AFM we came to the conclusion that Retailcoin is not a security according to current Dutch law. They have confirmed by email that the issuance of Retailcoin on the public crypto-exchange will not be subject to AFM oversight. With regards to the ICO, the crowdfunding activities currently is not subject to AFM oversight.

We do stress out that this doesn’t mean that the AFM is approving anything of Retailcoin or our business around it. It only means that they listened to our information, they applied the law and regulation and deemed Retailcoin not an investment object. With new information or new laws or regulation, they may also change their perspective on Retailcoin or even start an investigation.

We are grateful for the AFM to take the time and go into discussion with us. Even though we may not be regulated, we are committed to apply self-regulation and ensure that consumers are protected, even without direct oversight from the AFM.

There is a lot of nuance and there are a few important qualifiers but the fact is they received a no-action letter from a major federal agency. As far as I know, this is a first in the world — and that’s a significant win.

But it’s still not enough. As I noted in Observer this week, we need the fine folks in Washington to step up and offer clear definitions. Crypto assets aren’t going anywhere, and the ambiguity is a waste of time for entrepreneurs, token buyers, and the federal agencies themselves.

My name is Andrew J. Chapin. I’m the CEO of Benja, the merchandise ad network, a token advisor (including for Retailcoins, mentioned in this post), and the head of the startup foundry Chapin Labs.