Securities and Exchange Commission (SEC) Chairman Jay Clayton has said that although ICOs are an effective tool to raise capital, they must adhere to securities law.
The chairman’s latest ICO-related comments came during his speech on SEC rulemaking recently. He said that digital assets, ICOs and distributed ledger technologies are an “area where the Commission and staff have spent a significant amount of time” and that this would continue into 2019.
According to Clayton, ICOs are working in a manner where investors are not protected like traditional securities are, leading to higher chances of market manipulation and fraud. He and his organization have a tough stance on ICOs, saying that most of them are just like securities and, therefore, must be treated like one. This means ICOs must follow the laws set for securities under the SEC:
“I believe that ICOs can be effective ways for entrepreneurs and others to raise capital. However, the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed.”
The chairman also highlighted the commission’s openness to blockchain technology and its financial applications by talking about the creation of SEC’s Strategic Hub for Innovation and Financial Technology (FinHub). One of the major tasks of FinHub is to facilitate crypto startups to comply with current regulations when it comes to ICOs and launching of their tokens. Clayton said the “door remains open to those who seek to innovate and raise capital in accordance with the law”.
The SEC is very active when it comes to violation of regulations. Only a couple of days ago, it had issued an order to digital fund asset platform CoinAlpha Advisors to halt its ICO, fining it USD 50,000 for breach of regulations.
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