The Chariman of the U.S Securities and Exchange Commission, Jay Clayton, has issued new statements with regards to the regulatory risks that may arise with the launching of an initial coin offering or ICO.
Clayton commented on Tuesday to Fox Business that while he “loves this technology” he added that companies should not overlook existing securities laws, regardless of whether the token sales are done privately or publicly.
Furthermore, he stressed out how some companies are setting their sights on the blockchain funding model following issues raising money using conventional methods and called this trend rather “troubling”.
Clayton stated in the interview:
“We have seen instances where companies seem to have had trouble raising money in a traditional private placement and then have switched to an ICO in order to raise the money. The business hasn’t changed substantively, but it’s a form-over-substance way to raise money. That is troubling.”
Clayton also reiterated his claim that most of the tokens his agency has reviewed can be classified as a security.
“Many ICOs and many of the ones I’ve looked at specifically are securities”. He added that “they are offerings of interest in an enterprise where the buyer of the ICO of the token, you can call it a token, you can call it a security, is basically saying I’m investing with you with the promise of a future return”
In the end, Clayton shied away when asked how he and his office would enforce its regulations, saying that in the case of violations against federal securities laws, there are both private and public solutions.
Then again, he sends a message for companies planning to launch their own token sales: “We are watching.”