“ICOs Should Be Regulated As Securities,” Says SEC Official

News, Regulation | May 1, 2018 By:

Robert Jackson, a US Securities and Exchange Commission (SEC) commissioner, said that the SEC does not plan to ban initial coin offerings (ICO), but all ICOs should be regulated as securities.

In an interview with CNBC, Jackson said that while they are still worried about the ICO craze, the SEC is not looking to ban them and remains open to a legal avenue for crypto investments.

“Investors are having a hard time telling the difference between investments and fraud,” Jackson said. “Down the road, I think we will be thinking about ways to make those investments work consistent with our securities laws.”

When asked if his comments meant more regulation or an outright ban, Jackson said his comments did not suggest either of the two options, adding that “right now we are focused on protecting investors who are getting hurt in this market.”

Last week, SEC Chairman Jay Clayton said that every ICO token he has observed is a security, though he clarified that bitcoin and other “pure” mediums of exchange are exempt from that classification.

“We’ve been doing a lot in the ICO space,” Jackson said. “[SEC] Chairman Jay Clayton has been very clear about this. He said he hasn’t seen an ICO yet that’s not a security. And I’m with him — I haven’t seen one of these yet that’s not a security.”

According to Jackson, the ICO market right now is a prime example of an unregulated securities market.

“One of the things about ICOs that are interesting is if you want to know what our markets would look like with no securities regulation, the answer is the ICO market.

The SEC has been cracking down on fraudulent ICOs in recent months. It has warned of pump-and-dump schemes in ICOs, and issued subpoenas to firms and individuals behind projects it believes are breaking the law. However, these actions have not affected the majority of ICOs.

During a hearing at the US House of Representatives last week, William Hinman, the director of the SEC’s Division of Corporation Finance, said that the area of crypto assets and ICOs “continues to evolve.” He said that the SEC was striving for a balanced approach, and one that ensures capital formation while maintaining a strong focus on investor protection.