ICOs are popular all over the world, so why can American residents only watch helplessly?

Although cryptocurrency ICOs are very popular, many people are still not clear about certain regulations. One of the questions that is often asked is why these ICOs try to avoid the participation of American citizens? There are many reasons for this phenomenon, but it is not that difficult to solve this problem.

ICOs and the U.S. are not compatible

Recently, anyone who has participated in a cryptocurrency ICO or ICO pre-sale has noticed that these projects are theoretically closed to US residents. Some projects even try to avoid participation from Singapore residents. It is clear that these two countries are not friendly to cryptocurrency ICOs, mainly due to regulatory reasons.

In this regard, the regulation of investments in the United States is quite strict. Only accredited investors can participate in private securities placements. While some would say that all cryptocurrency ICOs sell tokens and not securities, regulators have a completely different opinion on this. Most of the ICOs we have seen can be defined as traditional stock sales.

As expected, the teams that launch cryptocurrency ICOs cannot guarantee that the Americans who participate in the project are authorized investors. Therefore, they will take necessary measures to prevent most US residents from participating, but these are avoidable. Currently, every ICO project will ask you if you are a US citizen in advance, but they will not verify whether you are telling the truth. Some projects will block US residents through location, but you can easily solve this problem with proxies or VPNs. It is impossible to really prevent Americans from participating in ICOs, but the corresponding restrictions cannot be lifted.

Some of the larger cryptocurrency ICOs have hired lawyers to create a “workable” environment for interested investors. If they don’t take these steps, the entire token crowdsale could be subject to criminal charges by U.S. officials. That said, the U.S. Securities and Exchange Commission (SEC) may investigate a specific crowdsale for some reason. While the SEC seems interested in regulating ICOs, it’s unlikely to take action against a specific ICO at this point.

Once the SEC starts intervening in cryptocurrency ICOs, which is only a matter of time, things will get interesting. Many ICOs have not taken the necessary steps to "deny" Americans from participating in the investment. At that time, all projects and the teams behind them will be temporarily controlled by the SEC. Violating US securities laws is not something that everyone can handle. In addition, such laws may be imposed on companies outside the United States, so countermeasures are essential.

It is clear that this unregulated space will be of interest to financial regulators around the world in the coming years. The bigger question is how many companies will get burned by not doing due diligence. It is a shame that most ICOs fail. The fear of future criminal charges will definitely have a huge impact on the development of these crowdsales.