The US Securities and Exchange Commission (SEC) has announced that it will soon clarify when and how cryptocurrencies may be categorized as securities, according to the Director of Corporation Finance of the regulating body.

William Hinman made these comments during the DC Fintech Week conference held in the US capital earlier. He committed to releasing new regulations in “plain English” to help guide developers who are planning to offer new tokens in the market. The latest guidance seeks to help young innovators determine if their potential coin project may be classified as a security or not. However, Hinman didn’t give an appropriate release date for the new guidelines.

The SEC has currently tightened control over ICOs in the country with little or no new projects granted regulatory approval. While it is trying to open up to the process with a new FinHub that provides instant feedback regarding regulations on securities and securities offering, the SEC still maintains an iron fist on the proceedings with one of the toughest approval processes in the world.

When Hinman was asked about how the SEC would differentiate between a security and utility token, he said that it would look on a variety of factors including expected rate of return touted on the investment. According to him, if an investor is promised return on his investment or something that will increase the price of a token offering, the SEC will probably look at it from a securities point of view.

This may not be the path developers want towards regulation but the regulator is promising to be more transparent in the process. Once the actual rules become clearer to the crypto community, they can be debated among users.

 

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