Hester M. Pierce, Commissioner of the US Securities and Exchange Commission as of January 2018, indicated in a speech last week concerning the classification and regulation of ICOs that the agency considers cryptocurrency a long-term development which needs guidance.

The SEC’s decision as to the classification of cryptocurrency is very significant in the US because it will determine what laws and taxes are applied on their transaction.

She distinguished between three concepts: cryptocurrencies, tokens and ICOs. Of coins like Bitcoin she said: “They may be currency, commodities, or something else, but it is unlikely that, on their own, they’re actually securities.” Utility tokens she also recognized as a form of exchange.

Finally, ICOs for Pierce are possibly securities, or at least “look the most like securities.”

Securities in the US were defined in a 1946 case (SEC vs. Howey) as an investment in a common enterprise with the expectation of profits solely through the efforts of another.

“There is a way of figuring this out,” she said confidently, but in reality, real conclusions there were few. She said that while ICOs most resemble securities they are not necessarily so, and each must be evaluated on a case by case basis. She said that she doesn’t like regulatory sandboxes (“the regulator is typically sitting right there next to the entrepreneurs”), but is not against them either.

“The best path forward is for regulators to approach ICOs and tokens with intense curiosity.”

She recommended “setting up a web page devoted to questions and comments about ICOs, tokens, distributed ledger, and other crypto concepts.”

SEC’s charges on hedge fund advisor:

The Securities and Exchange Commission today announced that it has charged New York-based investment adviser Premium Point Investments LP with inflating the value of private funds it advised by hundreds of millions of dollars. The SEC also charged Premium Point’s CEO and chief investment officer Anilesh Ahuja as well as Amin Majidi, a former partner and portfolio manager at the firm, and former trader Jeremy Shor.

According to the SEC’s complaint, the scheme ran from at least September 2015 through March 2016 and relied on a secret deal where in exchange for sending trades to a broker-dealer, Premium Point received inflated broker quotes for mortgage-backed securities (MBS). In addition, the defendants allegedly used “imputed” mid-point valuations, which were applied in a manner that further inflated the value of securities. This practice allegedly boosted the value of many of Premium Point’s MBS holdings and further exaggerated returns. The complaint alleges that the defendants overstated the funds’ value in order to conceal poor fund performance and attract and retain investors.