The Securities and Exchange Commission (SEC) has implemented revisions to regulations governing Initial Coin Offerings (ICOs) in order to bolster investor confidence and guarantee the provision of essential information. These alterations come into effect as of April 16, 2024.
The amendments concerning ICO governance and advertising are aimed at elevating trust in fundraising and investment via ICOs. They place emphasis on the establishment of mechanisms such as check and balance, token holder resolutions, and advertising compliance.
Previously, the SEC Board endorsed proposed regulations focusing on ICO governance to safeguard investor interests and enhance the awareness and accountability of ICO issuers towards project management for the benefit of token holders. Public feedback on these regulations, gathered during a February 2024 hearing, largely supported the principles and draft regulations outlined.
Key aspects of the amended regulations include requirements for a check and balance mechanism within ICOs to protect token holders’ rights, procedures for token holder resolutions, and guidelines for ICO advertising. Advertisements must adhere to stringent regulations, including refraining from inducing hasty investment decisions, providing adequate warnings on risks, and ensuring the accuracy and reliability of external information references.
Non-compliance with advertising standards may prompt the SEC to request the issuer to amend their content to ensure the delivery of accurate, comprehensive, and non-misleading information to investors. The updated regulations have been officially published in the Government Gazette and are effective from April 16, 2024.
