For example, investors have sued the organizers of the ICO for a company called Tezos that raised over $230 million. Reuters reported two lawsuits have been filed — the most recent one was filed this week and alleged that Tezos' organizers broke U.S. securities laws and defrauded and misled participants during the token sale, according to Reuters.
Garlinghouse said token issuers are currently operating in a "gray area," while waiting for regulation to catch up. In the long run, he said, that gray area will go away. The CEO pointed out that in the securities market, it took decades for rules protecting both investors and companies to be implemented — the same will happen with digital tokens.
"There are a lot of really fabulous things that get done with digital assets and blockchain technologies to reduce friction, to reduce costs, and enable things that weren't possible before. I think instead of focusing on those, we're distracted by what's going on in this gray area," Garlinghouse said.
Authorities in China, United States, Singapore, Japan, South Korea and elsewhere are looking into ways to regulate cryptocurrencies and the issuing of digital tokens. Some argue that having heavy-handed regulation could stifle innovation in blockchain as companies may need to set aside a larger portion of their budget for regulatory compliance.
Lubin said he disagreed. "I haven't seen regulators stifle innovation at all," he said, explaining that proponents of cryptocurrencies and regulators have similar interests: They are "attracted to more equitable systems" that are fair and efficient, they like consumer protection which is what decentralization "is kind of about and we have to work it out. We have to mature it."
He added that regulators needed to wrap their head around the details of how the technology works and "rationalize what it offers compared to what the current rules are."
Bitcoin, the world's biggest cryptocurrency by market value, has taken plenty of bad press from financial luminaries in recent months.
On Thursday, Morgan Stanley's CEO told CNBC that bitcoin does not deserve the attention it's getting. His Wall Street peer, JPMorgan Chase CEO Jamie Dimon predicted that if "you're stupid enough to buy [bitcoin], you'll pay the price for it one day."
Despite the skepticism, the cryptocurrency almost topped $8,000 per token on Friday morning Asia time — it started 2017 at only about $1,000.