Growing concerns about ICOs and so-called “utility tokens” among regulators, lawyers, and industry insiders have come to light in recent months. Just recently, SEC chairman Jay Clayton dropped a bombshell: “I believe every ICO I’ve seen is a security.”

Utility tokens have become a hot topic as a potential way to circumvent securities laws in token sales.

At Berkeley’s ICO Conference last year, Reuben Bramanathan, Product Counsel at Coinbase, warned that there’s currently no “bright line” rule for what is a utility token.

The popular Swiss foundation model for setting up an ICO is not as safe as one thinks, either. Tezos raised $232 million and now must fend off multiple civil lawsuits for securities fraud after issuing a token under the model.

The ICO industry is basically relying on the 2017 DAO Guidance from the S.E.C. But, some contend the line between “security” and “non-security” is not so clear with more guidance forthcoming.

“The reason people like Jamie Dimon and Paul Stiglitz are making a fuss is because things are not so black and white anymore,” says David Drake, an institutional advisor for Polymath. “It all began with consensus on the blockchain. Now, opportunistic traders are buying and selling securities, property, and currency on distributed platforms. Polymath helps facilitate this, and we still need more infrastructure.”

Drake, who is also the founder of the family office-focused LDJ Capital, believes the diverse nature of participants in blockchain technologies makes it more difficult for regulators to decipher securities from non-securities and for the public to decipher frauds from legitimate companies.

“Blockchain has this truly intrinsic value, but it gets a little opaque on what is happening and what is going to happen,” says Drake. “The immutability, privacy, and compatibility of blockchain is here to stay. Most people get confused by the noise, like traders jumping in and trading the news. But, at the bottom of it is forensic accounting software.”

After helping to set up the first crowdfunding meeting with SEC and Finra in 2012 with his financial media company, The Soho Loft Media Group, Drake has become an expert on crowdfunding. He believes regulatory uncertainty will ultimately lift the veil on ICO markets.

“People don’t understand certain legal definitions and the underlying documents needed to issue a compliant security token,” says Mr. Drake. “You have to make preparations with institutions from the S.E.C. to currency exchanges, as well as in Canada, the US, and abroad. Then, the Chicago Mercantile exchange believes some virtual currencies are commodities, while the IRS see them as property. And they are all correct depending on how you interpret the law and utility.”

According to Drake, the Polymath securities tokens platform would be “the economic governing structure to help firms help themselves” in an age where “the line between security and non-security has blurred.”

It would also give investors the confidence that tokenized companies have made an effort to use tools that help form the basis of a legal token sale.

“This would allow the mainstream public to feel more comfortable that their money is safe,” says Drake. “And that will facilitate more capital in the space.”