Securities and Exchange Commission (SEC) Chairman Jay Clayton went on FOX Business yesterday to inject some fear into investors — particularly those interested in Initial Coin Offerings (ICOs).
‘We Are Watching’
SEC Chairman Jay Clayton has issued a serious threat to the cryptocurrency space and, in particular, to ICOs.
Clayton — who was nominated by President Donald Trump — initially claims he’s just got investors’ best interests at heart, telling FOX Business:
I worry in particular about people who see things that look like a New York Stock Exchange or NASDAQ listing for ICOs or cryptocurrencies and think that I’m getting the same protection for my token that I would be getting for a share of stock that trades on an exchange. They’re not.
Now that you know Clayton’s got your back, you can also rest assured that he and the SEC are investigating whether or not ICOs are violating securities laws. He told FOX Business:
Many ICOs and many of the ones I’ve looked at specifically are securities. … For some reason, people selling ICOs seem to think they don’t need to follow either path; they seem to think they can have the best of both worlds: a limited disclosure from a private placement and public trading and public offering of the token.
Unsurprisingly, Clayton’s concerns rest primarily with how ICOs raise their capital. He explained:
We have seen instances where companies seem to have had trouble raising money in a traditional private placement and then have switched to an ICO in order to raise the money. The business hasn’t changed substantively, but it’s a form-over-substance way to raise money. That is troubling.
Nevertheless, Clayton knows a war against cryptocurrency will ultimately not work in anybody’s interest — particularly his. Thus, he pretends he wants to open a constructive dialogue, while at the same time sending a threatening message:
It’s important to understand that the fundamentals of our securities laws do apply in this space. It’s a technology with great promise. … It’s a technology that I really think is pretty cool and can change the way people do business at a great deal of efficiency, but it doesn’t mean that you can obviate our tried-and-true approach to the federal securities laws.”
Clayton’s entire discussion can ultimately be summed up in three authoritarian sentences:
Abide by the law. We are watching. Others are watching.
What do you think of Clayton’s warning? Do you think ICOs should be more careful with how they raise funds? Let us know in the comments below!
Images courtesy of Bitcoinist archives.
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