Jay Clayton, Chairman for the Securities and Exchange Commission (SEC) has recently stated that Initial Coin Offerings (ICOs) “can effective” , however “securities law must be followed.” Clayton further elaborated on the subject during a speech made regarding the SEC’s activity during this years BLANK.
While regarding the distributed ledger technology (DLT), digital assets and ICOs, Clayton further stated that this is an “area where the Commission and staff have spent a significant amount of time.” Furthermore, he stated that its expected “that this trend will continue into 2019.”
Clayton went on to underline a number of concerns when it comes to ICOs. For instance, he pointed out the fact that ICO’s are currently operates in a way that grants them substantially less investor protection than the standard traditional equities and fixed income markets.
Clayton concluded his speech by stating that the consequences of this are “greater opportunities for fraud and manipulation.” Clayton pointed out that most ICOs should likely be considered securities.
“A number of concerns have been raised regarding the digital assets and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in the traditional equities and fixed income markets, with correspondingly greater opportunities for fraud and manipulation.”
Although, during a speech he made in December 6th, Clayton stated that he does see the potential ICO’s have, but that regulations must be followed,
“I believe that ICOs can be effective ways for entrepreneurs and others to raise capital. However, the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed.”
Its heartening to see the SEC Chief not be completely against the idea of ICOs and understandable as to why he views it as a securities. During his speech, Clayton did add that the SEC has recently launched a Strategic Hub for innovation and Financial Technology (FinHub), which will make it much simpler for fintech startups, including those working with crypto assets, to navigate the legal implications of their products.
“As the FinHub and our other activities demonstrate, our door remains open to those who seek to innovate and raise capital in accordance with the law,” he said.
Do you think ICOs will be able to continue flouring if they adhere to these regulations?
Let us know your thoughts.