July 27, 2017
Alex Wilhelm is the Editor in Chief of Crunchbase News, covering the intersection of startups and money.
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Morning Report: After the Securities and Exchange Commission (SEC) threw a wrench into the overheated initial coin offering (ICO) market, cryptos are surprisingly flat over the last 24 hours.

After a selloff, news that the federal government was taking a more-pointed interest in the ICO market, and by proximity, the broader crypto world, failed to throw the top currencies down the stairs

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In fact, over the past 24 hours bitcoin, etherum, ripple, and litecoin, and dash are up or down by no more than three percent. Those cryptos — the most valuable by market cap, as ranked by CoinMarketCap — aren’t even all down over the last day. Dash is up 31 basis points.

Surprising resilience, blind optimism, or both? To answer that, let’s quickly understand what the SEC is up to.

The SEC Cometh

In a release that instantly spread on Twitter, the SEC dropped a bombshell that boasted a sub-headline that read as such: “U.S. Securities Laws May Apply to Offers, Sales, and Trading of Interests in Virtual Organizations.”

As such, according to the agency, “issuers of distributed ledger or blockchain technology-based securities must register offers and sales of such securities unless a valid exemption applies.”

Oversight is essentially an antonym for “ICO,” making the situation quite interesting. Here, at the edge of technology, we can see the government try to keep up. The SEC, to its credit, admits it has more work to do: “The SEC is studying the effects of distributed ledger and other innovative technologies and encourages market participants to engage with us.”

What impact may the SEC’s news have on the ICO market? Here’s TechCrunch’s Katie Roof:

[The news] is a blow to many startups that had been using ICOs as an alternative way to raise capital. There have been a wave of these offerings in recent months, where people have been investing in business ideas via Bitcoin, Ethereum or other cryptocurrencies.

But like all startups, these investments bear risks. And the opaque nature of the ICOs meant that there wasn’t enough oversight about what the businesses did with the proceeds. Many of the coins are traded on secondary markets, which provides short-term liquidity.

We’ll keep an eye on the flow of new ICOs. What could happen is new ICOs simply block US investors from taking part in the future. However, I am not sure how much money as a percentage of recent ICOs US-based investors have bought. (TechCrunch claims that the move may already be happening: “In anticipation of an SEC crackdown, some [ICO-using startups] had already prohibited U.S. investors.”).

If the effort is technically feasible and what we might call regulatory-sufficient, remains to be seen.

For now, enjoy the relative crypto calm. It never lasts.

From the Crunchbase Daily:

No summer lull for startup funding

  • Fundraising startups get no summer break. Venture investors are just as likely to strike deals in the “dog days” of summer as any other time of the year, according to a Crunchbase News analysis. When raising their own funds, however, VCs tend to prefer closing earlier in the year. (For more stories, follow @crunchbasenews on Twitter and check us out on Facebook.)

Adobe to retire Flash

  • So long, Flash. Adobe announced that it plans to stop updating and distributing the Flash Player at the end of 2020. The company will encourage content creators to migrate Flash content to newer open formats.

Canaan Partners closes $800M fund

  • Venture capital firm Canaan Partners has raised $800 million for its latest fund, its largest ever. The Silicon Valley-based firm closed its last fund, for $675 million, in 2014.

Vicarious raises $50M

  • Vicarious, a developer of artificial intelligence technology for robots, has closed on $50 million in a Series C funding round led by Khosla Ventures, bringing total funding to date for the Silicon Valley company to $122 million.

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