Securities and Exchange (SEC) Chairman Walter Joseph “Jay” Clayton III equated Initial Coin Offerings (ICOs) with securities in his speech during the 49th Annual Institute on Securities Regulation in New York City on November 8.
Clayton explained in his speech to an exclusive group of attorneys that ICOs could be counted as securities and in the United States, traders of securities must abide federal securities law and register as a national securities exchange. This is his first statements regarding cryptocurrencies after being nominated by President Trump and confirmed by the Senate in Summer as Chair.
The Chair was a long-time attorney who represented Deutsche Bank, UBS while his wife worked for Goldman Sachs during his nomination as SEC Chair. He added “I have yet to see an ICO that doesn’t have a sufficient number of hallmarks of a security,” according to the Wall Street Journal.
Clayton further explained that several ICOs mirror traditional stock offerings and the only difference is the involvement of tokens and use of distributed-ledger technology. ICO is beginning to be a trend now. This year alone, more ICO raised more than $3 billion which made it festive to the eyes of celebrities, Wall Street, and government regulators. Some government, China being the most notable, have come down on ICOs.
During the opening night of Governance and Transparency at the Commission and in Our Markets, Clayton devoted his speech to budgets, long and short-term plans, and five years outlook for the SEC. In the later parts, he wailed at the naiveness about many online platforms that carry digital currencies. According to him, “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.”
SEC Chairman ended his speech with a promise that “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.”
The event was held in New York City’s Roosevelt Hotel sponsored by the 84-year old non-profit legal education outfit, Practicing Law Institute. It is a three-day gathering that costs $2,495 per ticket, where readers can attend networking and opportunities galore.