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Today the New York Times reported on confidential proceedings of a trade group classified as the “Venture Capital Working Group” who met with US securities regulators to propose a “safe harbor” for several virtual currencies, including Ethereum.

The group was led by Andreessen Horowitz and included Union Square Ventures, as well as lawyers from Cooley, Perkins Coie, and McDermott Will & Emery.

The safe harbor would ensure that these cryptocurrencies would not be classified as securities — which SEC chairman Jay Clayton recently implied is possible — therefore avoiding heavy regulation and a significant drop in value.

Some regulators have suggested that many cryptocurrencies lack the transactional utility required to be considered currency. This means that many of the most popular altcoins, especially those issued through ICOs, are in danger of being regulated as contracts or securities by the SEC.

The group proposed to define many existing cryptocurrencies as “utility tokens” rather than securities. They argued that Ethereum “has become so decentralized it should not be deemed a security,” according to the New York Times. Regulators are reported to have not been overly supportive of the new proposal.

Richard Levin, a lawyer at the firm Polsinelli who works with companies in the space, told the New York Times that the impending regulations are “a ‘come to the lord’ moment” for the crypto industry.

“We are seeing a watershed moment in which many firms in the digital asset community who may have been ignorant of the law — or poorly informed — are now coming to terms with the fact that they are subject to regulators.”

It is not known what will happen to the companies whose tokens may be classified as securities down the road, but the classification could lead to increased restrictions on day trading that drastically impact the crypto market.

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More: Venture Capitalists Seek ‘Safe Harbor’ for Virtual Currencies
Similar: SEC Chief Clayton: ‘Every ICO I’ve Seen Is a Security’
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