U.S. Securities and Exchange Commission (SEC), like most other prominent financial regulators, look poised to expand its oversight of the token market even as issuers continue opting out of the U.S. jurisdiction. Their Chairman, Jay Clayton, has once again stated that initial coin offerings (ICOs) are securities and should be regulated as such.
The statement from Clayton comes when he was speaking at a public forum organized by SEC on the subject of “Investing In America”. While Jay Clayton maintained his positive tone towards blockchain technology in general, his comments declared that ICOs are securities.
Speakers in the forum set a common tone that nearly all investment types, outside of cryptocurrency, are increasing in complexity and technological advances, and the agency is improving their own data and technology to keep up and improve security. The discussions reaffirmed that the agency wants to welcome innovation with blockchain technology but is also extremely cautious toward fraud, especially as it relates to retail or individual investors.
“Blockchain technology has incredible promise for securities and other industries. It greatly reduces transactions costs, including the costs of verification. It’s a powerful technology… That technology, people have used to apply to fundraising… we’ve had pretty clear…rules on how to conduct fundraising when you’re offering securities. Much of what I have seen in the ICO or token or ICO space, is a security offering… I don’t know how much more clear I can be about it.”
Clayton has described ICOs as securities on multiple occasions but has been careful not to equate them with scams. He has publicly acknowledged that not all token raised are used for illegal activities but has warned investors against fake projects. He does believe that the same regulations that have built the US equities markets are still applicable and he “expects them to be followed.
Ms. Kara, the commissioner of SEC acknowledged that ICOs and Cryptocurrencies are essential for innovation. She said:
“[Cryptocurrency] has the potential to reduce the cost of investing. It could decrease the cost of capital allocation. We are being challenged, we are being disrupted like everybody else is… and one of the things we’re thinking about is how to embrace the innovation and make sure it’s used effectively. One thing we are thinking through is how to ideally anticipate and prevent problems before they arise.”
Of course we couldn't end this post without at least bringing up the ‘ongoing' dialogue between John McAfee, a crypto community creator and multi-ICO token backer, and his live CNN debate challenge offer with SEC Chairman Jay Clayton – all of this happened after this news story – then the first meme war tweet storm happened here – and yet no response to Mr. McAfee but Mr. Clayton did offer more comments to the tune of ‘tokens are not exempt-from regulations‘.
Ask yourself, what are the odds the SEC would ever debate about ‘initial coin offerings' and securities law on a live broadcast with such a character as John McAfee? Are they scared of him being right? or do they not see it/him fit? or might the answers still forming and becoming something they can officially speak to and act on?