SEC Chair on Cryptocurrencies.
The world’s social media platforms and financial markets are abuzz about cryptocurrencies and “initial coin offerings” (ICOs). But are these new digital revolutions going to stand the test of time? The SEC’s chairman thinks so, but also heeds caution to investors seeking to get behind the trend. With the incredible growth in the BloThe world’s social media platforms and financial markets are abuzz about cryptocurrencies and “initial coin offerings” (ICOs). But are these new digital revolutions going to stand the test of time or are we in the middle of a bubble? The SEC’s chairman suggests that this is groundbreaking technology, but also heeds caution to investors seeking to get behind the trend. With the incredible growth in the Bitcoin market alone, it is no wonder that cryptocurrencies and ICOs are receiving significant focus.
Not only have the markets for these grown at breakneck speed, now covering local, national and international markets, they simultaneously include an ever-broadening range of products and participants. The SEC reminds potential stakeholders, however, that any activity that involves an offering of securities must be accompanied by the important disclosures, processes and other investor protections that exist within existing securities laws. Last week the SEC “filed charges against a recidivist Quebec securities law violator” attempting to run a scam ICO that claimed it would return 1300% returns in under a month. This week it closed another ICO making exceptional claims about what the SEC decided would be an unregistered securities offering.
If you are considering an ICO or cryptocurrency investment opportunity, it is likely that you still have questions surrounding the laws and regulations relevant to these offerings. These may include:
- Is the product legal? Is it subject to regulation, including rules designed to protect investors? Does the product comply with those rules?
- Is the offering legal? Are those offering the product licensed to do so?
- Are the trading markets fair? Can prices on those markets be manipulated? Can I sell when I want to?
- Are there substantial risks of theft or loss, including from hacking?
The answers to these and other important questions often require an in-depth analysis, and the answers will differ depending on many factors. That said, SEC Chairman Clayton’s outline of issues to consider are worth reviewing – over here.