SEC Chairmain Jay Clayton has issued a public statement today in regards to cryptocurrencies and initial coin offerings (ICOs). This follows their ICO halt on Munchee just today and also the emergency asset freeze last week of those behind the PlexCoin ICO.
It was inevitable that the SEC would begin to take notice of cryptocurrencies and ICOs due to the sheer popularity and funds they were generating in such a short span of time. Although their public statement does not impose any new regulations on ICOs, it does provide a clear foundation for how ICOs will start to be regulated in the near future.
We strongly urge you to read the whole statement issued by the SEC, but we have noted some key points below.
"Investors should understand that to date no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies. If any person today tells you otherwise, be especially wary."
It is interesting to note that CBOE's bitcoin futures launched yesterday on December 10th.
"As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost."
"I also caution market participants against promoting or touting the offer and sale of coins without first determining whether the securities laws apply to those actions. Selling securities generally requires a license, and experience shows that excessive touting in thinly traded and volatile markets can be an indicator of “scalping,” “pump and dump” and other manipulations and frauds."
However, even though the general consensus amongst the community is that the SEC is wary and does not favor ICOs, Clayton states otherwise:
"I believe that initial coin offerings – whether they represent offerings of securities or not – can be effective ways for entrepreneurs and others to raise funding, including for innovative projects."
The public statement ends with sample questions investors should ask before investing in any ICO. Their main concern appears to be protecting investors from the growing number of scams going on lately, especially with recent ones such as Confido happening.
The SEC appears to be taking measured actions and does not want to hinder the growth of this new sector, but regulations will come sooner rather than later. We think this will only serve to make the entire space stronger as a whole.
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