The chairman of the US Securities and Exchange Commission (SEC), Jay Clayton, has acknowledged the potential of initial coin offerings as a fundraising method, but also warned that “securities laws must be followed”.
He said that the Commission and its staff have devoted “a significant amount of time” this year to Distributed Ledger Technology (DLT), digital assets and ICOs. According to him, he expects this trend to continue well into 2019.
Stating further, Clayton said, “I believe that ICOs can be effective ways for entrepreneurs and others to raise capital.” However, he added that securities rules must be adhered to where appropriate.
However, the SEC chairman also signaled that the regulator will continue to enforce securities rules when appropriate.
Clayton underlined that there are “a number of concerns” relative to ICOs. More precisely, he pointed out the fact that, according to him, ICOs are currently operating in a way that grants substantially less investor protection than that of traditional equities and fixed income markets.
In other words, this leaves greater vulnerabilities in the system and increases the risk of fraud and manipulation.