The SEC and CFTC’s meeting with Congress focuses on cryptocurrencies and tokens being securities, fraud susceptibility of the crypto market and ICOs among much more as mentioned here.
Top remarks from SEC Chief Jay Clayton
Today, in the meeting on virtual currency, the chairman of SEC, Jay Clayton and the chairman of CFTC, Christopher Giancarlo, testified in front of the Congress. A few of the most important takeaways from the remarks made by Jay Clayton are:
- Bitcoin and Ether are not considered currencies. It has been claimed that just because something is called a currency or a currency backed product, it does not in any way means that it is not a security.
- Most of the utility tokens are basically securities. Again, if a token is merely being called a utility token or structured in such a way that provides some kind of utility doesn’t mean it isn’t a security.
- Due to the tokens and bitcoins being a security, most of the ICOs hence is a sale of securities. As specified by him: “By and large, the structure of ICOS that I have seen involve the offer and sale of securities and directly implicate the securities registration requirements.”
Moreover, the exchanges where the investors are trading the tokens are not considered exchanges. The reason being they are not registered with the SEC.
As quoted by Clayton:
“Many trading platforms are even referred to as ‘exchanges.’ I am concerned that this appearance is deceiving. In reality, investors transacting on these trading platforms do not receive many of the market protections that they would when transacting through broker-dealers on registered exchanges or alternative trading systems.”
Apparently, no ICO is registered with the SEC and it has also not approved any cryptocurrency related assets such as Exchange Traded Funds. If there are any remarks to the contrary by anyone, the SEC warns investors to be wary of them.
He also mentioned the market being susceptible to frauds from different factors. Furthermore, excessive touting in volatile and thinly traded markets can also be an indicator of frauds, scaling among a number of other manipulations.
Anyone who violates the law has to face strict actions as the new Cyber Unit in the Division of Enforcement will work more aggressively. Talking about strict measures, Clayton commented:
“I have asked the SEC’s Division of Enforcement to continue to police these markets vigorously and recommend enforcement actions against those who conduct ICOs or engage in other actions relating to cryptocurrencies in violation of the federal securities laws.”
This move made by SEC is basically to ensure the protection of investors and punishes those who violate the security laws.
What are your views on Clayton’s remarks? Let us know your thoughts in our comment section below!