Background
Synthetix (SNX) founder Kain Warwick believes US regulators should have stayed away from initial coin offerings (ICOs).
SEC’s Response to ICOs
Warwick criticizes the U.S. Securities and Exchange Commission’s (SEC) response to ICOs as “schizophrenic and bumbling,” leading to a worse outcome for the sector.
ICOs and Retail Investors
ICOs were used to raise funds by promoting new cryptocurrency ventures to retail investors. The SEC cracked down on ICOs in 2018, claiming that token sales may violate securities laws.
Consequences of SEC’s Actions
Warwick argues that the SEC’s actions gave more power to venture capital funds that launched coins at higher valuations, making it riskier for retail investors to participate.
Early Investors vs. Retail Investors
Warwick highlights the significant difference in returns between early investors and retail investors in crypto projects. Early investors now enjoy much higher returns compared to retail investors.
Challenges for New Crypto Projects
Warwick emphasizes the challenges faced by new crypto projects due to limited liquidity from venture capital funds. He believes this market distortion is largely due to the SEC’s actions.
Regulatory Clarity
Warwick suggests that regulatory clarity is not forthcoming and encourages crypto projects to take risks and allocate a significant portion of their supply to retail investors.
Conclusion
Warwick believes that projects that decide to go for a big retail sale early will build a massive following and shift the narrative. He challenges US projects to prove him wrong by taking this approach.
