First Bitcoin Capital, a publicly traded Bitcoin firm, has been temporarily suspended by the US Securities and Exchange Commission (SEC).
The Canadian company is comprised of financial and technology experts with the mission of acquiring and investing in Bitcoin startups. They are also involved in a number of other cryptocurrency related business, including a network of ATMs and a Bitcoin exchange. Shares of First Bitcoin Capital (BITCF) were being traded at $1.79 on OTC market until today’s suspension, which will only be lifted September 7th.
According to the SEC, the suspension was due to concerns regarding the: “accuracy and adequacy of publicly available information about the company including, among other things, the value of BITCF’s assets and its capital structure.” This may come as no surprise, since company stock has been seeing unprecedented growth, being up up 6,072% in 2017 and a staggering 24,421% in the last 12 months.
SEC vs Bitcoin
This isn’t the first time the SEC issued a suspension on cryptocurrency-related firms. Just last month, CIAO group was suspended because of plans for an upcoming ICO.
This is just part of the continuous dismissal of Bitcoin by the SEC watchdogs. The commission has rejected several bitcoin ETF (exchange-traded fund) proposals from companies like SolidX and Grayscale. The most well known proposal, COIN ETF, was introduced by the Winklevoss twins, internet entrepreneurs portrayed in the movie “The Social Network”. It was rejected after careful revision by the commission, citing risks of fraud and lack of regulation in the bitcoin markets as the main reasons.
SEC Shuts Down ICOs
But now it seems the commissioner has shifted their sights on the ICO scene. Following a statement released in July, the commission express their opinions on the security of DAO tokens and how they should be regulated. The SEC announced that certain digital tokens will be considered securities, and that whoever creates or participates in unregistered offerings could be subject to criminal punishment. It also alluded to previous security incidents, like the DAO hack, demonstrating the risks involved.
Most recently, the Canadian Securities Administration (CSA), the Canadian equivalent to SEC, has released a statement declaring that digital tokens should fall under the definition of a security. It also listed the requirements that companies should take when launching and managing ICO’s (initial coin offerings), as well as the exchanges who list digital assets for trading. The CSA declared:
“With the offerings that we have reviewed to date, we have in many instances found that the coins/tokens in question constitute securities for the purposes of securities laws, including because they are investment contracts. In arriving at this conclusion, we have considered the relevant case law, which requires an assessment of the economic realities of a transaction and a purposive interpretation with the objective of investor protection in mind.”
As Bitcoin and cryptos continue to gain traction, regulators are expected to step in. Although some are concerned about the incompatibility between regulations and decentralized currencies, the latest interventions by the SEC may help the space to shed some of its unwanted actors like scammers and hackers.