Research On Securities Law Supervision Mechanism Of Initial Coin Offering (ICO)

As an endogenous financing method in the blockchain,ICO has irreplaceable advantages in providing financing convenience,broadening investment channels and encouraging the development of innovative technologies,but also brings a series of market risks.How to use the current effective laws to supervise ICO and balance innovation and risk is a common problem faced by most countries.The early stage of legal supervision is qualitative and classification.According to the function of the token,ICO tokens are generally divided into investment type,utility type and payment type.The complexity of ICOs leads to qualitative challenges,which in turn leads to a regulatory vacuum for ICOs.Some of the tokens issued by ICOs have securities attributes,and it has become the consensus of many countries to incorporate these ICOs into the securities law regulatory framework.In terms of identifying the securities attributes of ICO tokens,the Howey test analysis method of "investment contracts" in the US securities law shows the advantages of both flexibility and certainty,and plays an important role in dealing with ICO financial innovation.Through the Howey test analysis of various tokens,it is found that investment tokens have securities attributes,and some utility tokens and payment tokens may also have securities attributes.The implementation of securities law supervision for ICOs with securities attributes is the proper meaning of the title.However,due to the narrow scope of the definition of securities in my country’s "Securities Law",there is a gap in the supervision of securities tokens.In September 2017,my country stopped ICOs,and this policy also played a role in curbing risks in the short term.However,in the long run,my country’s "one-size-fits-all" prohibition model has not only failed to achieve the expected results,but has hindered innovation and is not conducive to the formation of my country’s multi-level capital market.To improve my country’s ICO supervision mechanism,first of all,regulators need to change the supervision concept and adopt flexible supervision and penetrating supervision.Secondly,it is necessary to clarify the attributes of ICO on the basis of respecting the economic essence of various ICO tokens.Finally,it is necessary to expand the scope of the definition of securities in my country’s "Securities Law",and include ICOs with securities attributes into securities supervision.