SEC Won’t Soften Its Stand On Treating ICOs as Securities

During a recent interview with the CNBC, Jay Clayton - Chairman of the U.S Securities and Exchange Commission (SEC) said that the agency is in no mood to give any special allowances and will continue to treat Initial Coin Offerings (ICOs) as securities.

Clayton made it clear that any form of digital tokens which represent the value of the project are securities, and thus should be regulated with the laws under the SEC jurisdiction. He further explained 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.”

The consideration of ICOs as securities will require American and other global cryptocurrency exchanges to obtain a license from the SEC in order to deal with the tokens and the ICOs. Clayton said: “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.”

On the other hand, Clayton also made it clear that digital currencies like Bitcoin which are used as currencies for regular transactions will not be regulated by the SEC. He said: “Cryptocurrencies: These are replacements for sovereign currencies, replace the dollar, the euro, the yen with bitcoin,” Clayton said. “That type of currency is not a security.”

Clayton refused to comment anything specific regarding whether certain altcoins like Ether and Ripple to be treated as securities or not. Clayton, at the moment, gave no clear answer about the regulation of such projects which started by selling securities but have later transformed into being completely decentralized with no leadership.

He 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.”