In an official statement from yesterday, Securities and Exchange Commission (SEC) chairman Jay Clayton warned cryptocurrency investors to exercise “extreme caution” when backing initial coin offerings (ICOs) – especially the ones that claim to be registered with the SEC.
Addressing the massive hype around cryptocurrencies, blockchain and ICOs, Clayton offered his “general views” on the current state of affairs in the market.
“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that, as they are currently operating, there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation,” the SEC official commented.
The chairman then proceeded to urge traders and investors to stay ‘especially wary’ about ICOs and individuals claiming to be fully legitimate, clarifying that – to this date – no exchange-traded products “holding cryptocurrencies or assets related to cryptocurrencies” have been listed or approved for listing with the SEC.
“Investors should understand that to date no initial coin offerings have been registered with the SEC,” Clayton said. “If any person today tells you otherwise, be especially wary.” He also advised enthusiasts to do their research and approach opportunities that “sound too good to be true” with a healthy dose of skepticism, encouraging the cryptocommunity to ask questions and demand clear answers.
Despite his cautionary message, Clayton expressed keen excitement for the future of blockchain.
“The technology on which cryptocurrencies and ICOs are based may prove to be disruptive, transformative and efficiency enhancing,” his statement read. “I am confident that developments in fintech will help facilitate capital formation and provide promising investment opportunities for institutional and Main Street investors alike.”
As governments all over the world are only now starting to address the notorious lack of regulations in the cryptocurrency space, it is refreshing to see that the SEC is taking the matter seriously – and without labelling the entire field as a breeding ground for fraudulent activity, like some leading bankers have done in the past.
While the debate for the necessity of regulations remains an open topic, many have argued that introducing more legislation for blockchain-based projects and ICOs could be a good thing. Among other things, formal laws could curb deceitful attempts and make it easier to hold perpetrators accountable.
We can all benefit from sensible regulations – and it’s good that the SEC is not taking the wrong approach to introducing such measures. Let’s hope things they stay in the right direction.
Meanwhile, all cryptocurrency and ICO beginners ought to familiarize themselves with the SEC’s crypto-investment tips before blowing their pockets empty. There’s a lot of sage advice in there. The full list can be found at the bottom of this page.