Leading voices from the regulatory, legal, and investment worlds came together on Feb. 21 to assess the state of cryptocurrency and initial coin offerings. The event, hosted in Orange Silicon Valley’s Innovation Garden in collaboration with the National Venture Capital Association and WilmerHale, attracted a full room for a series of engaging talks and discussions under the umbrella of its title theme, “ICOnomics.”
Speakers covered not only what has happened so far in cryptocurrency’s short history, but also what may lie ahead in terms of how governments will treat ICOs, how investors approach them, and what responsible behavior by those holding ICOs should encompass.
The evening’s program began with opening remarks by Orange Silicon Valley CEO Georges Nahon, who introduced the room to Orange’s recent fintech activities and the launch of Orange Bank. That was followed by remarks from John Eisenman, a software architect on Orange Silicon Valley’s fintech and blockchain team, covering major events in cryptocurrency and blockchain technology that fueled 2017’s explosion of ICO activity.
— Maryam Haque (@nighthaque) February 22, 2018
“At some level,” ICOs are similar to the classic concept of seigniorage, wherein the value of a currency being issued is greater than value of its material worth due to the issuer’s desire to profit off its creation, Eisenman explained.
Eisenman’s talk was proceded by an activity overview from PitchBook Analyst Evan Morris, as well as commentary from Mark F. Radcliffe, a partner at DLA Piper, who delved into blockchain’s implications more broadly as a platform and target for venture capital investment.
Radcliffe encouraged blockchain developers to learn from the wealth of experience available from other open-source projects. He also addressed smart contracts as an application for blockchain tech, though he doesn’t believe that they’ll have a net negative impact on jobs for attorneys.
“Smart contracts are not going to cover everything,” Radcliffe stated, speculating that they will be useful as tools, but may eventually create more opportunities for lawyers, not fewer.
The rest of the night featured talks from Nicolas Morgan, a partner specializing in white collar defense at Paul Hastings, LLP; Joseph Borg, who is currently director of the Alabama Securities Commission and president of the North American Securities Administrators Association; and Gates Hurand, a trial attorney with the U.S. Commodity Futures Trading Commission. The three of them covered emerging legal issues for startups launching ICOs. Those topics included celebrity endorsements, which Morgan expects to see challenged in court in the coming year, as well as situations and contexts where cryptocurrencies may or may not be treated as securities.
The event’s speakers widely agreed that ICOs are not all the same and that different rules may be relevant in different cases. However, there did seem to be agreement that those who launch ICOs should educate themselves. Borg, who handles regulatory issues at a state level, also urged startups to educate their appropriate regulatory bodies about what they are doing to make it clear that they are acting in aggreement with relevant laws.
— Alex van Dillen (@AlexvanDillen) February 22, 2018
Since Borg’s office monitors and prosecutes a variety of traditional fraud operations and cryptocurrency is still a young and evolving area for the financial world, the more information ICO companies share with him the better; moreover, that engagement gives his office the opportunity to educate token issuers who might not be aware of how regulatory bodies will view their activities.
After all, confusion at the top most commonly trickles down. So problems can often get far worse by the time citizen-consumers begin making decisions about their savings and 401k accounts.