SEC seems hell bent on bringing ICOs under its purview. The US financial markets regulator yesterday issued it’s strongest ever declaration regarding ICOs at a public forum, making very clear that it considers ICOs as securities and would therefore like them to follow the rules and regulations that apply to securities. The comments came from none other than SEC chairman Jay Clayton, who has been at the forefront of ICO crackdown.
Clayton was speaking at a public forum organized by SEC on the subject of “Investing In America”. It was a highly anticipated meeting because it was expected that SEC would clarify its stance on ICOs and cryptocurrencies even more at this meeting. And the same thing happened, though what SEC said was not very pleasing to the ears of investors present during the meeting. While Jay Clayton maintained his positive tone towards blockchain technology in general, his comments declared that “ICOs are securities”. He said:
“Blockchain technology has incredible promise for securities and other industries. I think we all can agree on that… 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.”
Though Clayton and other SEC officials didn’t point out any specific coins in their comments, these were the most direct and clear statements ever given by them. Besides these comments they also set out a general tone that they’re improving their systems and standards to keep up with the pace of innovation in cryptocurrency and ICO space. Ms. Kara, the Commissioner of SEC, said:
“[Cryptocurrency] has the potential to reduce the cost of investing. It could decease 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 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.
I think remaining competitive requires, both us as regulators and market participants, to thoughtfully evolve with the innovation and not react to it after the fact. For example, there are increased risks for pump and dumps and Ponzi schemes, perhaps, because it’s so easy to now invest in that hotel resort community in some African nation.”
Now it will be interesting to see how ICOs in USA react to these comments of SEC boss. Looking at the tone that Clayton has adopted this it seems that some action is not too far for ICOs that don’t toe the line of SEC. Next few months are going to be very tense if ICOs still decide to ignore the words of SEC.