According to a report published by Wall Street Journal, Jay Clayton the chairman of SEC stated that, “I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security,” while addressing an exclusive group of lawyers. Since his nomination by President Trump in January, this was his first public statement regarding the red-hot market of cryptocurrency.
He delivered his speech at the 49th Annual Institute on Securities Regulation organised in Roosevelt Hotel of New York City on 8th November 2017. The three day gathering sponsored by the 84 year old Practising Law Institute, is attended widely by LLC and given its ticket price of 2495 USD, attendees did achieve a complete value for money.
Chair Clayton, a long time attorney who had represented UBS and Deutsche Bank told the Journal that, “When you depart from the bitcoin or the ethereum, and you get into the tokens, the hallmarks become pretty clear.” Mr. Clayton also said that “Many ICOs resemble traditional stock offerings, with the only difference being the new fundraising tool involves tokens and distributed-ledger technology.”
150 ICO’s have raised up a corpus of more than 3 Billion USD in the current fiscal gaining attention from Wall Street veterans, celebrities and even government regulators. Chinese and South Korean government have not reacted positively to this ever-widening phenomenon by deploying a ban on ICO trading. The opening night keynote of Chair Clayton’s, Governance and Transparency at the Commission and in Our Markets revolves around long term plans, budgets, baseball and five year outlook of SEC with only two paragraphs at the end of the speech concerning ICO’s.
He lamented about having, “a distinct lack of information about many online platforms that list and trade virtual coins or tokens offered and sold,” under the heading, “Initial Coin Offerings” and was quick to issue a warning regarding how “investors often do not appreciate that ICO insiders and management have access to immediate liquidity, as do larger investors, who may purchase tokens at favorable prices.”
He also elaborated on the fact by stating that, “trading of tokens on these platforms is susceptible to price manipulation and other fraudulent trading practices.” He explained that ICO’s, “may be securities, and those who offer and sell securities in the United States must comply with the federal securities laws.” He was quick to add that, “any person or entity engaging in the activities of an exchange must register as a national securities exchange.”
He signed off in a slightly aggressive tone regarding how, “the Commission will continue to seek clarity for investors on how tokens are listed on these exchanges and the standards for listing; how tokens are valued; and what protections are in place for market integrity and investor protection.”
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