Top cryptocurrency investors Andreessen Horowitz and Union Square Ventures urged the US Securities and Exchange Commission (SEC) to consider a cryptocurrency exemption at a private meeting, the Wall Street Journal reports April 19.

The Silicon Valley-based venture capital firms met with top officials of the SEC’s Division of Corporation Finance, which regulates Initial Coin Offerings (ICOs), to argue against stringent cryptocurrency regulations that they claim would impair the development of the young growing industry.

According to WSJ, the group of crypto investors argued that ICO tokens should not be considered as investments, but as products that can be used to access services of startup companies, which would allow startups to carry out token sales without observing formalities such as business reviews and financial reports. The group assured the SEC that ICO issuers would be held accountable in cases of fraud.

The SEC has privately expressed skepticism to such a broad exemption, and is more likely to opt for a “limited exemption” from oversight, wherein each investor would acquire investments limits, and the purchased tokens would not be resold to third parties for profit.

Since the SEC introduced its cryptocurrency probe in February, which followed previous suggestions that ICOs may be violating securities laws, the regulatory body has increased pressure on ICO projects. The SEC even shut down stock trading of three companies due to “questions regarding the nature of the companies’ business operations” vis-a-vis ICOs.

The question of cryptocurrency and ICO regulations is a crucial issue, with many crypto believers expressing their concerns over excessive regulatory scrutiny towards the industry. Others, like head of regulatory relations at Ripple Ryan Zagone, encourages regulatory measures. Recently, Zagone compared the existing crypto regulatory framework to the early days of the Internet.

“We’re at that time now where we need more clarity and rules and we need more certainty. It’s a good time to start revisiting that ‘wait and see’ ­approach taken by regulators.”

According to Perianne Boring, president of the Chamber of Digital Commerce, developing sensible regulation will take time, “You can’t start writing laws and regulations today and expect to get it right, it’s building on wet cement.”

In March, Chief Legal and Risk Officer at Coinbase Mike Lempres claimed that at its current stage, the US regulatory system “is harming healthy innovation” due to a lack of understanding of what should be allowed and what should be not, and how digital assets should be considered; either as securities, commodities, property, or currency.