The Blockchain Association has filed an amicus brief against the US Securities and Exchange Commission (SEC), which is currently seeking charges against Telegram for its $1.7 billion ICO, arguing that Gram tokens are not securities.
An amicus brief is an official document filed in court which originates from parties who are not active litigants, but who have a strong interest or expertise in the subject matter.
The Blockchain Association, which aims to be a “unified voice” for the blockchain and cryptocurrency industry, is a collective of industry leaders with a focus on American blockchain technology issues.
Members include Coinbase, eToro, Grayscale, Circle Pay, Ripple, Kraken, and more. In November 2019, the association formalised a working group for blockchain companies to understand securities laws.
In a Medium post on January 21, the Blockchain Association stated that it opposed the SEC’s effort to block the launch of the Telegram network, saying that Gram tokens are not securities according to traditional definitions.
Explaining the importance of the ruling to the blockchain industry, the post reads:
“The court’s ruling could be among the first to decide the important question of whether and when the US government may treat a digital asset as a security.”
The SEC argues that Telegram’s Gram tokens were securities as it was reasonable for investors to expect their value to be influenced by the development of the Telegram TON ecosystem.
Clearer regulation required
One of the strongest criticisms of the SEC’s approach towards blockchain assets and ICO securities laws is the lack of consistent regulatory advice available to operators.
In November 2019, Telegram accused the SEC of being “unconstitutionally vague”, saying the regulator had failed to provide “concrete public guidance” for ICO operators in a developing area of the law.
Members of the Blockchain Association appear to support this view, explaining:
“Many companies in the blockchain sector are actively engaged in developing and operating business models that affirmatively adopt the jurisdiction of the federal securities laws and want clear, predictable guidance on how to comply with the law.”
As a result of the SEC’s dogmatic approach to ICO regulation, the Blockchain Association argues that innovation in the blockchain sector has been undermined and that the regulator has severely restricted the USA’s position as a digital asset leader.
The report reads:
“Many investors have been dissuaded from engaging with these new technologies, and countless innovators have relocated abroad, affecting potentially thousands of American jobs in a global, hundred-billion-dollar industry.”
The SEC has also recently issued a warning to investors to steer clear of initial exchange offerings, branding the new token sale method as an extension of the ICO craze.
You can read more about the Telegram vs SEC case here.