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The SEC in the US is scrutinising Initial Coin Offerings: report

The United States Securities and Exchange Commission (SEC) is reportedly scrutinizing the rise of Initial Coin Offerings (ICO), as indicated by Reuters. The publication estimates that the size of the ICO market is around $90 billion and the increased activity around these financial instruments had pushed the value of bitcoins to $2,911.86  on Tuesday. The ICO is the cryptocurrency analogy for the Initial Public Offering. In an ICO investors get virtual coins or tokens instead of a share in a company or fund. Recently in India, BitcoinGrowthFund, a startup fund for blockchain companies, raised $2.5 million as part of its ICO. Small investors were invited to invest in the offering by buying tokens called MCAPs and the funds are used to mine various cryptocurrencies like Bitcoin, DASH, Ethereum, Monero, Litecoin, Z-cash, and others. MCAP owners will be paid dividends monthly based on returns from investments in the currencies. Token owners can also trade and exchange these token amongst themselves and other users at any time. A part of the fund will also be invested in other blockchain projects. However, there is contention on the issuance of such tokens are the equivalent to the creation of a new security and therefore if they should be regulated at all by the SEC. Reuters added that the having a token does not mean having a stake in the business. In certain cases, deals are structured where investments in the tokens could lead to a future share in revenues in a venture. There are also cases where investment can be compared…

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