Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Any currency used as an investment in the venture affecting the value of the token will be categorized as securities as per the SEC jurisdiction.
The U.S Regulatory watchdog – Securities and Exchange Commission (SEC) – has been very closely monitoring the ICO market having a view since a long that ICOs should be treated as securities. During the latest CNBC interview, SEC chief Jay Clayton reiterated his position saying that the SEC won’t soften its stand on ICOs and hence sales of these tokens will have to follow the regulatory law.
“If you have an ICO or a stock, and you want to sell it in a private placement, follow the private placement rules. If you want to do any IPO with a token, come see us. File financial statements, file disclosure, take the responsibility our laws require.”
During the interview, Clayton also talked about the type of characteristics which the SEC would look for while determining whether a blockchain-based token constitutes a security. Clayton 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 explained this in a comprehensive manner saying:
“A digital asset where I give you my money and you go off and start a venture, and in return for giving you my money you say you know what, I’m going to give you a return, or you can get a return on the secondary market by selling your token to somebody – that is a security, and we regulate that. We regulate the offering of that security, and we regulate the selling of that security.”
However, when asked about his stand on Bitcoin, which is currently being used for carrying out transactions, Clayton said that it won’t be included in the SEC regulation. He said:
“Cryptocurrencies: These are replacements for sovereign currencies, replace the dollar, the euro, the yen with bitcoin. That type of currency is not a security.”
While Clayton made his stand clear on the ICOs and Bitcoin, he declined to comment anything on his stand regarding whether other altcoins like the Ether would be treated as securities. Over the last two months, there have been a lot of discussions and talks regarding the possibility of SEC considering a few altcoins as securities.
Clayton referred to his definition of security to the interviewer saying that “anything representing an underlying asset or the value of a project will continue to be considered a security.” However, he didn’t have a set answer for the regulation of Ethereum-like projects which have started by selling out securities but have later adopted the decentralized behavior with no particular leadership.
Clayton concluded saying:
“That’s a question that is out there and will be answered under specific facts and circumstances, but we’ve been doing this a long time and there’s no need to change our fundamental approach.”
Meanwhile, this cloud of regulatory measures hovering over the cryptocurrency market, resulted in the less active participation from investors causing the market to consolidate for a long time.