SEC Issues Comprehensive Statement Outlining its Position on ICOs

SEC Issues Comprehensive Statement Outlining its Position on ICOs

The U.S. Securities and Exchange Commission, the federal body responsible for overseeing the rules and regulations that govern securities investment, has just released a full statement clarifying its current position in relation to the rising phenomenon of ICOs. 

The statement lays out its advice to two specific target audiences, what it terms as “Main Street” investors and institutional investors, but begins by underscoring the importance for everyone to undertake due diligence in relation to an investment opportunity before pursuing that same opportunity. 

Pragmatic in tone and, in parts, positively enthusiastic about the new prospects for “disruptive, transformative and efficiency enhancing” approaches to “capital formation” brought by the blockchain-based crowdfunding model, the statement nonetheless points out that it will not tolerate attempts to bypass the existing legislative framework that currently applies to securities investments. 

Referring specifically to attempts to classify tokens as having a utility-based function and therefore not covered by existing securities regulations, it highlights what it identifies as claims which “elevate form over substance” and furthermore asserts that such claims will likely not be applicable to ICOs operating under their jurisdiction. 

“Sharp Focus”

The full statement, issued on behalf of SEC chairman Jay Clayton, also incorporates a separate section which refers to cryptocurrencies, specifically outlining that: 

just as the SEC has a sharp focus on how U.S. dollar, euro and Japanese yen transactions affect our securities markets, we have the same interests and responsibilities with respect to cryptocurrencies

It appears, then, that the SEC is seeking to remove any ambiguity in relation to its categorisation of cryptocurrencies which has previously been a source of both confusion and frustration for federal authorities. It remains to be seen, however, if the SEC statement released this afternoon will help to address these issues.

It should be noted, however, that Clayton has highlighted within the statement itself that the positions he proffers cannot be regarded as definitive at this stage.