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Comment by option_greek | Hacker News Reader

I don't get how the SEC differentiates between ICOs and kickstarters (not considering the ICOs that promise their token value to increase over time). How can there be any kind of innovation in fund raising space if the SEC wants every thing to be registered as securities. What bugs me the most is that many ICOs are funded by virtual currencies (btc or eth) and still SEC considers it self to have jurisdiction over the transactions that grown-up individuals do. Instead of considering $1mil net worth investors are accredited, SEC should have a certification test that an individual can take to prove he understands finance. If someone has $1mil, it doesn't prove a damn thing. It could very well be that they inherited it or won in a lottery.

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>and still SEC considers it self to have jurisdiction over the transactions that grown-up individuals do.

Umm, isn't that the entire purpose of the SEC or even more broadly the purpose of all contract, finance, and commerce laws? Just because someone is moving bits around instead of pieces of paper doesn't mean the law doesn't apply to them.

> SEC considers it self to have jurisdiction over the transactions that grown-up individuals do.

The SEC considers itself to have such authority because the laws passed by Congress explicitly give it that authority. If you have a problem with that authority existing in the SEC, your complaint should be directed at Congress, not the SEC’s factually accurate belief in the existence of its legal authority.

Well kickstarters aren’t securities, while many coins are. That’s a pretty straight forward distinction. And the SEC has jurisdiction if some part of the transaction or company is in the United States. Also pretty simple.

when you back a kickstarter you don't receive a store of value that you can re-sell to another party. That's a vague statement to be sure; you could say the same thing about beanie babies, for example. But Ty did not sell beanie babies to people under the auspices of resale value. Therein lies the rub: the crime is not in selling a thing that has value that can be resold (since that describes all property), it's advertising your product as an investment vehicle.

> How can there be any kind of innovation in fund raising space if the SEC wants every thing to be registered as securities?

That regulation protects the layman who doesn't know that an ICO is a glorified trust.

I think it's because ICOs give you a tradeable token; kickstarter contributions cannot be traded for profit.

Contributors can as well sell their future orders as backorders on ebay or amazon or directly. Many successful kickstarters had their products sold at much higher prices after they are received (mainly the early bird ones).

In that case, the original buyer is the one who is receiving the goods and then sending to their counterparty.

If the marketer of a Kickstarter promoted their product as an investment-grade asset, they could indeed have legal problems. People forget that a big chunk of what the SEC is concerned about is marketing and promotion.

I believe Kickstarter projects are "pre-orders" and not investment instruments.

I'm relatively ignorant but I think it's a matter of fungibility.

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