CURRENCY - New Virtual Currencies Hit Barriers in U.S. and 2 Other Nations
Regulators in the United States, South Korea and Switzerland all took independent steps on Friday to crack down on so-called initial coin offerings, a hot but risky new method of raising money for start-ups.
In the first nine months of the year, various projects raised over $1.5 billion from investors by selling new virtual currencies, according to CB Insights. These new coins are usually modeled on Bitcoin, but are meant to be used only inside the projects they are associated with. One new coin, for example, is intended to be a gambling chip in a still-unfinished casino program.
The market has taken off with investors around the world, but has so far operated with almost no regulatory oversight.
In the United States, the Securities and Exchange Commission warned in July that some of these offerings were likely to violate securities law, but the agency did not take steps against any specific offenders at the time.