SEC Chair Clayton Promises To Ramp Up Enforcement on ICOs and Crypto in Senate Testimonybr>
US Securities and Exchange Commission chairman Jay Clayton called today for regulators to “come together” to concoct a plan on dealing with the digital currency markets.
Clayton testified alongside Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo before the Senate Banking Committee today.
“We should all come together, the federal banking regulators, the [Commodity Futures Trading Commission] and [Securities and Exchange Commission] — there are states involved as well — and have a coordinated plan for dealing with the virtual currency trading market,” said Clayton.
Cryptocurrencies are regulated by the CFTC as commodities. However, the digital markets have little regulatory oversight.
Clayton said his agency planned to take a closer look at initial coin offerings (ICOs), noting that most appeared to be securities. “From what I’ve seen, initial coin offerings are securities offerings. They are interest in companies, much like stocks and bonds, under a new label,” he said.
He added: “Many ICOs are being conducted illegally. They are not following securities laws. Some say that this is because the law is not clear. I don’t buy that for a moment.”
The SEC has cracked down on some ICOs over the last six months, but the approach has been scattershot and affected relatively few. However, many nascent companies have complained about the regulatory path being unclear, which crypto and blockchain companies claim stifles innovation for fear of legal jeopardy.
Clayton also addressed exchange-traded funds (ETFs) in cryptocurrency.
“We’ve made it clear to the marketplace that there are a couple of issues with having an ETF that’s based on a cryptocurrency,” Clayton said. “They go to price discovery, custody and some other issues around volatility. We don’t want to approve an ETF with a cryptocurrency underlying it until we can get comfortable with those issues,” he said.
Lawmakers mostly harumphed and asked for more consumer protections, but offered little clarity on what that might mean.