On June 13th, a public forum “Investing In America: Atlanta Town Hall Meeting” was held by Securities and Exchange Commission (SEC). The SEC Chairman and Commissioners were primarily concerned with addressing current affairs surrounding investor awareness and protection and had open discussion on ICO’s, securities and blockchain technology today.
Among the SEC Commissioners were Commissioner Stein, Commissioner Piwowar and the SEC Chairman, Jay Clayton, who declared that “ICOs are securities”. Speaking at the forum, Clayton set a positive towards blockchain technology and other investment types, outside of cryptocurrency, that are increasing in complexity and technological advances.
According to Jay Clayton, ICOs can be qualified as securities because of the ability to trade “utility tokens” on the secondary market, enabling investors to make a profit. He said:
“Blockchain technology has incredible promise for securities and other industries. I think we all can agree on that… It greatly reduces transactions costs, including the costs of verification. It’s a powerful technology… That technology, people have used to apply to fundraising… we’ve had pretty clear…rules on how to conduct fundraising when you’re offering securities. Much of what I have seen in the ICO or token or ICO space, is a security offering… I don’t know how much more clear I can be about it.”
Jay Clayton has already made such a statement. Recently, he said that any currency used as an investment in the venture and affecting the value of the token will be categorized as securities, and thus will fall under the purview of SEC jurisdiction.
Clayton made his stand clear on the ICOs and Bitcoin, however, he declined to comment anything on his stand regarding whether other altcoins like the Ether would be treated as securities.
Kara Stein, another Commissioner of the SEC, said at the forum:
“[Cryptocurrency] has the potential to reduce the cost of investing. It could decease the cost of capital allocation. We are being challenged, we are being disrupted like everybody else is… and one of the things we’re thinking about is how embrace the innovation and make sure it’s used effectively. One thing we are thinking through is how to ideally anticipate and prevent problems before they arise.”
“I think remaining competitive requires, both us as regulators and market participants, to thoughtfully evolve with the innovation and not react to it after the fact. For example, there are increased risks for pump and dumps and Ponzi schemes, perhaps, because it’s so easy to now invest in that hotel resort community in some African nation.”
The U.S. Securities and Exchange Commission (SEC) is a financial regulator and an independent agency of the United States federal government. The mission of the SEC is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public’s trust.
SEC seems hell bent on bringing ICOs under its purview and is fully committed to the current digital asset regulations, saying to all those wishing to conduct token offerings in the U.S that the Commission will allow no exceptions to the current securities law, no matter what the economic cost.
Recently, SEC has come out with an innovative approach towards educating investors and making them aware of ways to prevent falling in the trap of fraudulent ICO schemes. SEC, which has been combating ICO frauds over the last few months, itself released an ICO website called HoneyCoins.com.