Given the recent popularity of cryptocurrency ICOs, it was to be expected some things would be unclear to a lot of people. One of the most recurring questions is why all of these ICOs try to prevent US citizens from participating. There are many different reasons as to why this is the case, even though the countermeasures can be bypassed quite easily.

ICOs and US Citizens Don’t Mix Well

Anyone who has recently participated in a cryptocurrency ICO or pre-ICO may have noticed how these offerings are, in theory not available to residents in the US. Some projects even go as far as trying to dissuade residents from Singapore to participate as well. It is evident these two regions do not take kindly to cryptocurrency ICOs, mainly due to regulatory reasons.

To put this into perspective, the United States is quite strict when it comes to investment regulations. Only accredited investors can partake in private placements of securities. While some people would urge all cryptocurrency ICOs are tokens and not securities, regulators will have a very different opinion regarding this matter. A  lot of the ICOs we have seen can be labeled as traditional sales of equity.

As is to be expected, the team organizing a cryptocurrency ICO cannot guarantee only accredited US investors will partake. They can take the necessary steps to prevent most US citizens from investing, although these measures can be bypassed. Right now, the ICOs tend to ask if you are a US citizen, but there is no verification of whether or not one speaks the truth. Some projects use geolocation to block US citizens, but those can be bypassed with a proxy or VPN. It is impossible to prevent US citizens from participating, but these measures have to be taken regardless.

Some of the bigger cryptocurrency ICOs will ensure they hire lawyers who can create a more “workable” environment for interested parties. If they would not take these steps, their entire token sale would be liable to criminal charges in the US. That is, assuming the SEC would ever decide to investigate a particular crowdsale for those specific reasons. It is highly unlikely that will happen, even though the SEC is looking to regulate ICOs moving forward.

Once the SEC will effectively intervene in cryptocurrency ICOs – which is only a matter of time – things will get very interesting, to say the least. A lot of previous ICOs didn’t take the necessary steps to “deny” US citizens from investing. All of those projects and their teams are at the mercy of the SEC for the time being. Violating US securities laws is not something anyone wants to deal with. Additionally, these laws can also be enforced upon non-US companies, which makes it even more important to take countermeasures.

It is evident this unregulated space will be of keen interest to financial watchdogs all over the world in the coming years. The bigger question is how many companies will get burnt for not doing their due diligence. It is bad enough to know most of these projects may ultimately fail. Worrying about future criminal charges will certainly have a big impact on all of these crowdsales moving forward.

If you liked this article, follow us on Twitter @themerklenews and make sure to subscribe to our newsletter to receive the latest bitcoin, cryptocurrency, and technology news.

70 COMMENTS

    • Or… perhaps the U.S. is doing their job and protecting unsophisticated investors from blowing lots of money on scams and fradulent ICOs. Probably 99% of these ICOs are going to be worthless and people will be complaining that the government didn’t do anything to stop it…

      • So because some people can be stupid and don’t know how to perform due diligence or invest only what they can afford to lose, other people need to be punished for that as well? Again, anyone is allowed to gamble in a casino despite the mathematical fact that most games have a house edge, or blow all their money on lottery tickets, but somehow SEC banning of ICO’s is an efficient form of protection?

        • Better than angry, deluded people with pitchforks formenting revolutions.

          SEC didn’t ban ICO’s. They have to follow the regulations, just like any other legalized form of gambling, speculation or investing. Don’t want to follow, not seriously legitimate. It’s just that simple.

          • The irony is that the spirit of blockchain technology was to bring opportunity and freedom to the masses. It had the same aim as the internet. Now? This aim has been compromised by the 1 percenters. Anyone who supports it is in step with the internet’s would-be censors.

          • Those Opportunities and Freedom have been taken away from U.S. Citizens and Pretty Soon We will be Another North Korea and/or Cuban State.

      • That is the problem everyone needing protection. Do your due diligence, make your choices and accept the results of your choices. I think that is something called freedom.

      • Here here… make the gov’t 5x bigger because our own citizens can’t be trusted to make intelligent decisions. Please oh please protect us from ourselves!! Utterly contemptible attitude and the opposite of freedom in this case.

      • The government’s function is not hand-holding our vast hordes of semi literates. Whether they think so or not.
        It could be stated that the reason for your position is low quality, biased, Federal school educations.

        • Just curious, were individuals single handidly going to get Wells Fargo to admit they were creating fake accounts?

          How about Madoff? Do individuals have access to those books and the expertise to hunt down fraud?

          The government takes a very important role in protecting you from all kinds of fraud, it’s obvious you don’t understand it or appreciate it.

          For what it’s worth, I went to private school, but I’m sure you’re glad you got your irrelevant dig in.

          • This is a relevant dig, but not to people like you. You are aware and see the issues.
            Most people are not taught to participate in our economy except as debtors.
            As this is mainly the Government’s doing, most schools are Federal, perhaps the state could do better by educating people in some aspects of the economy and investment vehicles.
            You do have a deeply Statist bias, though. Government will always be better than the plebes, correct?
            Yup. Unlike the other statement, that is personal. Not every thing is an attack.

          • Regulation is important. Gatekeeping the working class out of potentially legitimate investment opportunities is not the good kind of regulation, it’s straight up classism. Either everyone should have these opportunities or no one should, it shouldn’t be restricted to whoever can buy a license. This really isn’t debatable. Also as long as any form of gambling is legal the “protection” argument holds absolutely no water, and it’s a dumb argument to begin with.

      • I don’t need nor do I want an effing babysitter. If I get hustled, it is on ME. There is a reason why you don’t reach for a hot stove more than once. The success never comes if you don’t get a freaking chance. Always expect to lose when gambling but gamble as often as you can afford to because the wins happen. Do your research before investing. But it would be nice to have the ability to take the chance.

      • Caveat Emptor. Who made it their job to stop us from investing? The politicians and lawyers in Washington. Who allows “accredited investors” to invest in ICO’s? Same crowd, the ones who rig the system to preserve their power.

  1. So basically they only want the rich ( accredited) to have investment opportunities. Can’t have to many poor people paying off debt with investment profits now can we?

      • Please elaborate. I am sick and tired of our overlords watching out for our best interests. Amazing how THEY allow themselves the opportunity to invest in cryptos. Simply AMAZING!!!!!!!!!!!!!!!!!

        • Sam Johnson: I Agree with You on that One. Simply AMAZING how the Land of the FREE keeps its U.S. Citizens Chained in Debt and Poverty. How the Land of Milk and Honey has us Hungry for a better life Free of Debt and Poverty…And how the Land of Opportunities Blocks Us from getting Any Opportunity to Prosper and Get Out of Debt and Poverty. The LAND OF THE FREE, MILK and HONEY, and LAND OF OPPORTUNITIES, Forgot to Mention that is ONLY for those Who Can Afford those Rights ( the RICH). The U.S. the biggest communism Wearing the Mask of of Lies, Deception & false Freedom.

  2. Thank god for proxies.

    And it was the immense power of regulatory agencies like the SEC, that the decentralized and at least pseudonymous blockchain technology was partially designed to address.

  3. This is not true or an action the SEC can enforce! President Obama signed the JOBSAct in which unaccredited investors can participate in new offerings for profit such as the crowdfunding community. ICO are no different and should be cjhallenged in U.S court!

    • ICO’s would have to follow those crowdfunding regulations, which none have to date. So the path of least resistance is just to legally exclude U.S. citizens in their terms and conditions.

      The SEC will enforce it by making an example out of a securities ICO, probably a big scam one. Utility ICO’s are safe.

    • StartEngine will be offering legal ICO’s soon via Title III or Title IV or Regulation D. Soon it will be that any ICO that doesn’t bother going through any of the three regulations will be highly questionable. Cost is not an issue with Title III.

  4. did that actually ever happen yet that any company that made an inappropriate ICO had serious troubles with SEC?

  5. The U.S. want everybody to stay broke and pay taxes. They won’t let you gamble online but they let you buy Lottery tickets that goes to the government. That is fine. I am sick of the U.S. makes you want to move to an island. I just want to make money a few companies I wanted to join won’t take U.S. people. U.S. people we have nothing they won’t let us have nothing we are the poorest country on earth really. There is no money in the bank. If you are not rich you won’t be rich you will be paying taxes.

        • well at least we can eat..we’re only “poor” because people have terrible spending habits..people are out here thinking they can afford gucci bags and mustangs. people don’t save money. people spend every dime they have on material things rather than spend it on an investment. that’s why we’re “poor”.

          • we’re poor as a nation because our politicians keep spending trillions more than their tax revenues generate. our living conditions will more accurately portray a nation in debt for ~$200T (including off-sheet liabilities) in the reasonably near future. we’re much poorer than many 3rd world nations because they aren’t in debt for 10X GDP. give it time… and as far as people spending every dime, they have to because the FED has devaluated our USD by 95% since 1971.

          • Michael Abuyo: Keep Lying to Yourself and putting a blindfold around your eyes about what the US Gov’t is doing to its Citizen. Pretty Soon We’ll be worst than Cuba, China, India, or North Korea. Just Give it a few More Years and You’ll See.

          • Speak for yourself! Some of us are working long hours (60/week) year after year to feed our children beans and rice, maybe an apple and some milk. I have been wishing I could invest all this time, but while my company tells us we are underpaid and that’s not going to change, I cannot find another job that pays what it should, and all my money goes to our survival, not luxury. Then, recently, I was given a small gift of money by an extended family member (to help because I broke my ankle) and I thought “Finally, I have a small chance!” I bought a litttle Etherium to invest in MinerOne, only to find out I was barred from salvation. We are not poor because we buy gucci bags. We are poor because the bad guys are highly organized.

        • compared to actual poor coutnries with low GDP, we have everything. in contrast to other first world countries, we spend a lot more than we make. our debt was only created by stupid people who can’t manage their money. when businesses take on debts, they put those in investments where they KNOW they can make that money back with interest and more.

          • The ONLY reason we have a great lifestyle in America is because we PRINT currency at the EXPENSE of ALL other nations. They have to produce more exports while we lay back and push the button again. We are stealing the wealth from other nations!

    • Yes, we all know what is happening here. The regulatory commission and other powers are locking up ICO’s. They are preserving the opportunity for the wealthy and denying it to the 99%. There is no confusion here, no deception. The U.S. serves the rich.

    • Weekdaygirl: Yes You Are Right!!!! The U.S. Government wants to Enslave Us to Poverty. And they Lie about Cuba. Pretty Soon the poorest chinese, cuban, and people in India will be a Lot Richer than any American Citizen.

    • Hi!
      EU citizen profoundly struck by the limitations imposed on US citizens by the lazy ICO devs ready to comply with whatever roumour of regulatory penalties here.
      Get in touch on [email protected] and I`ll help you get those nice looking tokens you are missing out on.

  6. Our overlord Congresspersons don’t want us to rise up out of wage-slavery. And they want to protect accredited investors so they can become even more rich while the rest of us fight for table scraps. All part of the Globalist agenda to keep us all enslaved to their power and control.
    Fortunately, cryptocurrency and blockchain technologies are going to put them out of business, and free the rest of us.

  7. I don’t give a flying rat’s ass about what the SEC has to say… I’m gonna go purchase any damn ICO that I see as a decent way to increase my net worth and finally get to say “Adios!” to this shit hole of a country!!!

    • Peter Connors: APPLAUD for You!!! Get the hell Out of this shit hole of a country as Soon as Possible, because is Fast becoming Another Cuban and/or North Korean State. ALL Freedoms taken Away. ALL

    • Same here. If you can get into a trusted ico pool it’s worth it. Only right now in this bear market a lot of prices are below ico price when they hit the exchanges, should be good again when the market improves

  8. It’s very simple. The people with the big money lobby the SEC to keep the little guys out. They cherry pick the best ICO’s, and ignore the duds. We can buy in after they pump it up to the moon, then they cash out. We still make money sometimes, but never get in on the early good deals.

  9. It makes me sick to see so many great opportunities slipping between people’s fingers in this space because they live in the U.S. “Land of the free” my ass. American citizens are indentured servants of the banking elite that want to keep them from getting rich.

    • Kirk Lazarus: YOU ARE SO RIGHT. A LOT of U.S. Citizen are Starting to Open Their Eyes about this so called “Land of the Fee” Bullshit.

  10. Yea illegitimate factions of our government have paid bribes to have many of these “laws” wrote to begin with and I’m sure Trump, being the genius he is, will come in from another angle, not a criminal one and as long as you’re a legit project/company and open the books and prove your not supporting terrorist organizations or nations like Venezuela, you’ll be good…just saying, that makes sense to me. That’s why it’s important to research diligently, if you invest in or start up a coin to support terrorism, you might be going to prison for a long time and rightfully so if that was your intent.

  11. This is what USA is afraid of. If a currency like bitcoin go up to 500k or 1M. There is no need for paper currency anymore. The value of Gold Silver Diamonds will all go down. Because Crypto money will be worth much more. Now No country can control it so it can not be used to control us. We then control ourselves. Things like better energy technology health care being poor and less war will also be possible from ico. We are in the early stages expect bumpy roads but soon its going to be out of the control of the government.

  12. I recently “thought” I had invested in an ICO only to later find out that Coinbase would not release the funds due to the fact that I am a US citizen. Thanks a lot! At the time of this post MY $100 would be at right around $37,000. Not rich but not bad either. Damned overlords. It may be time to devise an exit strategy.

  13. Pretty Soon the U.S. Citizens (or the majority of Us) will become the illegal Mexicans of Other Nations doing Hard Labor for Minimum wages and being Looked at as inferior beings. ~~~Sorry if I Offend Anyone, but the way We are being held captive living in Debt and poverty by the U.S. Gov’t and the 1% denying Us Opportunities that Can Set Us in Financial Freedom, it seems We are fated to Go that Way, having to flee America illegally to be Able to Feed Our Families.

  14. The best ways to make money are by selling products or investing in startups who want to sell things. The government does everything it can get away with to slow down or block off people from doing this stuff. I’m a marketer, salesman, business starter, and crypto enthusiast and I experience the problems the government creates for people seeking liberation. It all boils down to greed and human pillaging, you’re the man, I’m the man. Selfishness and scammery generate our prison.

  15. Fucking government scumbags. Lol holy shit do I wish I could be alone in a room with these assholes for just a few minutes.

LEAVE A REPLY

Please enter your comment!
Please enter your name here