ICOs Can Be Effective, But Rules Must Be Followed – SEC Chairman Jay Claytonbr>
Jay Clayton, chairman of the US Securities and Exchange Commission (SEC), said that “initial coin offerings (ICO) can be effective ways for entrepreneurs and others to raise capital,” but “securities law must be followed.”
During a speech last week about the SEC’s rulemaking over the past year, Clayton said that blockchain, cryptocurrencies and ICOs are areas where the Commission and staff have spent a significant amount of time. Clayton added that he believes that trend will continue in 2019.
“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.”
He said that while ICO fundraising can be effective, it does not change the fundamental point that, when a security is being offered, the SEC’s securities laws must be followed.
In an effort to centralize and better coordinate the staff’s work on these important issues, Clayton said the SEC recently formed a new Strategic Hub for Innovation and Financial Technology (FinHub). FinHub serves as a public resource for FinTech-related issues at the SEC.
“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,” Clayton said.
This is not the first time Clayton issued a statement regarding ICOs. Last month, the SEC chairmain said that while bitcoin remains a commodity, other ICO tokens classify as securities and companies that want to conduct one have to adhere to any relevant legal requirements that the SEC has outlined.