Speaking as part of a testimony to the United States Senate Committee on Banking, Housing, and Urban Development, the chairman of the U.S. Securities and Exchange Commission Jay Clayton expressed optimism that the distributed ledger technology (DLT) sector will “facilitate capital formation.” Clayton also discussed the enforcement actions taken by the SEC in regulating initial coin offerings (ICOs).
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The SEC chairman praised the commission’s regulatory apparatus pertaining to cryptocurrencies and DLT, describing it as a “balanced” approach that simultaneously “fosters innovation” and “protects investors.”
Clayton stated that the SEC has used a multitude of channels to convey its “message” to investors, citing the example of the SEC’s Howeycoins.com website. Of the site, Clayton said that the SEC “created a website to educate the public about frauds involving ICOs and just how easy it is for bad actors to engineer this type of fraud,” adding that the website attracted “over 100,000 people” within one week of being online.
Clayton stated that “while some market participants have engaged with our staff constructively and in good faith with questions about the application of our federal securities laws,” some companies have sought to “prey on investors’ excitement about cryptocurrencies and ICOs” and to engage in “fraud” or “other violations” of U.S. securities laws.
Clayton also highlighted the commission’s establishment of a cyber unit last year, stating that “In its first year, the Cyber Unit led investigations that resulted in several emergency actions to stop ongoing alleged frauds against retail investors that involved ICOs, as well as charges against a bitcoin-denominated platform and its operator for running an unregistered securities exchange and defrauding users of that exchange.”
Speaking on the cyber unit’s actions beyond ICOs, the SEC chair asserted that the unit’s enforcement actions led to the regulator returning $1.07 billion to investors during the 2017 financial year, and $794 during the 2018 financial year so far.
Do you think that the SEC’s regulatory approach is balanced? Share your thoughts in the comments section below!
Images courtesy of Shutterstock
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