Jay Clayton, chairman of the US Securities and Exchange Commission, yesterday issued a public statement on cryptocurrencies and initial coin offerings. In it he reacts to the current development in the crypto market and gives personal assessments of the situation as well as behavioral advice for investors.
Last but not least, the futures deal with Bitcoin launched on Sunday evening at the CBOE and the rush to enter into cryptocurrency trading over the last few weeks will have prompted Jay Clayton to personally address his role as SEC chairman to take the topic. Recognizing the immense potential of new technologies, Clayton notes that a number of investors and other market participants are currently facing various issues, such as the legality of a crypto-financial product, the market principles of crypto-trading or, in the case of providers, the Regulations for offering a product. Clayton directs his personal assessments and advice to two groups defined by him: private investors and professional market participants, whose actions influence the first group.
He advises private investors to deal in advance with a possible investment, especially when it comes to ICOs. It is still a very unregulated field, neither an ICO nor an ETF have been previously registered or recognized by the SEC. He also warns for special caution, since crypto markets know no national borders and investors can not be protected by the SEC when investing in foreign projects.
From the point of view of professional market participants, Clayton calls Initial Coin Offerings suitable tools to generate funds to finance businesses. However, this process must be consistent with the SEC’s legal framework for offering securities, such as investor protection. The change from traditional financing to blockchain changes the form of the transactions, but not the basic stock itself. These statements can therefore be understood as a warning to the provider of the crypto market, to abide by rules.
In general, he understands cryptocurrencies – even if they include the word component currencies – as securities, according to which they fall within the remit of the SEC. Particular attention is paid to the enforcement of strict anti-money laundering rules and the know-your-customer principle (KYC).
Jay Clayton has served as Chairman of the US Securities and Exchange Commission since May 2017 and is directly subordinate to US President Donald Trump, who also appointed him. His term of office is dedicated to the deregulation of US financial markets. Although his statement is expressly declared as a personal opinion, which does not automatically reflect the views of the entire SEC, Clayton’s position on cryptocurrencies and ICOs is likely to influence the behavior of the SEC.