The Securities and Exchange Commission is taking an interest in the hottest craze in cryptocurrency, the initial coin offering (ICO), and apparently the SEC is not into the hype. The commission published a report on Tuesday advising that ICOs, or token sales, are subject to securities laws. It concluded that a certain multimillion-dollar ICO last year — the first of its kind — violated securities law.

An ICO — an acronym that intentionally mirrors “IPO” — is a new way to raise money for a startup, using the cryptocurrency Ethereum. Like Bitcoin, Ethereum runs on blockchain technology. But one of the many differences between Bitcoin and Ethereum is that the latter offers “smart contracts” — automatically executed code that can take the…

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