Jay Clayton, the head of the U.S. Securities and Exchange Commission, has published new comments about the regulatory risks of launching an initial coin offering (ICO).
Performing to Fox Business on Tuesday, Clayton claimed that he “loves this technology” – but that means, he thinks companies shouldn’t ignore existing securities law, no matter whether a token sale is holded privately or publicly.
Noticeably, he highlighted how some firms are turning to the blockchain funding model after having problems trying to get money through more common ways, calling the trend “troubling.”
Clayton said 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.”
Also, the SEC head repeated his argument that a lot of the tokens his agency has reviewed drop under the definition of a security.
“Many ICOs and many of the ones I’ve looked at specifically are securities,” he told the network. “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.”
Eventually, Clayton protested when asked how the SEC would impose its rules, stating that there are both public and private solutions for violations of federal securities laws.
However, he had a message for companies looking to launch their own token sales: “We are watching.”