[incogitor]

> How many cryptocurrency companies do you know of that could pass an audit?

This is, quite simply, zeitgeisty prejudice. Most well-funded cryptocurrency companies have passed audits. I've worked for or with four crypto companies and three of them were audited (also all of them still exist).

You aren't allowed to count "fraud cryptobros from miami creating an ICO" if you don't count "fraud fratbros from harvard/yale creating a hedge fund". And if you do count both, then you'll notice that the proportion of fraud is roughly the same everywhere, we just allow ourselves to notice it in some places more than others.

> Why should the SEC bend over backwards to create new rules

Because you don't apply old rules to new contexts if you're a responsible government, especially if you're claiming jurisdiction over those new contexts. Registration and filing processes created for the paper era simply don't cut it for regulating self-executing financial instruments. Why doesn't the SEC have a registration smart contract? It is the SEC's responsibility to adapt to the times.

> Would you kindly point out a company that tried and failed to register an ICO

What do you not understand about "there is not process"? I've been a part of two companies who have tried. We have had "conversations", aka we try to reach out and a different attorney occasionally gets back in touch with us and rehashes the same conversation every six months. The longest effort went nowhere in four years. There is no registration, there is no process, there are no boxes we can check on the existing forms which govern what we do.

[kerkeslager]

> Most well-funded cryptocurrency companies have passed audits.

This is true in practice but untrue in spirit. Any nonsense project can pass an audit by hiring an equally nonsense auditor.

> You aren't allowed to count "fraud cryptobros from miami creating an ICO" if you don't count "fraud fratbros from harvard/yale creating a hedge fund". And if you do count both, then you'll notice that the proportion of fraud is roughly the same everywhere, we just allow ourselves to notice it in some places more than others.

This is blatantly untrue. Yes, there are plenty of forms of fraud which occur in hedge funds, but the public is shielded from many of these, because the most obvious forms of fraud were recognized and regulated decades ago. There's practically no such protections around crypto, and as a result, a whole host of obvious scams have flourished.

If you talk to almost any crypto investor, most of them have been scammed at some point. The same is not true of investors in traditional markets.

[martin8412]

How were they audited?

You can absolutely legally register your cryptocurrency as a security. The requirements just make it a non-starter.

There's is nothing inherently different between cryptocurrencies and securities. The accounting is irrelevant. If you promise people that their money will increase in value if they invest, then you need to register as a security if you want to sell to retail customers. You can continue selling the unregistered securities all you want to professional traders.