US SEC Closely Monitoring ICO Holders and Companies Switching to Blockchain

During the last few months, as the Initial Coin Offering (ICO) has taken the internet financial market by storm, governments throughout the world have been looking for ways to regulate these crowdfunding actions, in order to put them within legal limits.

Now, recent reports indicate that the chairman of the United States’ financial regulator, Jay Clayton, has held a speech emphasizing the need of legal gatekeepers for ICOs and the blockchain market.

According to the SEC chief, lawyers should be particularly careful about the legal measures they recommend, considering the fact that ICOs need to remain compliant with the US securities legislation. Therefore, Clayton mentioned that lawyers involved in the niche are: “assisting promoters in structuring offerings of products that have many of the key features of a securities offering (…) those lawyers claim the products are not securities, and the promoters proceed without compliance with the securities laws, which deprives investors of the substantive and procedural investor protection requirements of our securities laws,”

The speech continued with the SEC chief raising awareness about project managers who don’t listen to legal advice, and therefore push onwards with ICOs that could be characterized as securities offerings.

Clayton also talked about the decision that several companies have made, to rethink their services and adopt blockchain business models. In return, for many, this led to increased stock prices, hence a higher amount of disposable capital for companies in this space.

Another statement includes: “I doubt anyone in this audience thinks it would be acceptable for a public company with no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology to (1) start to dabble in blockchain activities, (2) change its name to something like "Blockchain-R-Us," and (3) immediately offer securities, without providing adequate disclosure to Main Street investors about those changes and the risks involved.” 

Based on everything that has been outlined so far, it seems like the US SEC is keeping a close eye on companies adopting blockchain technology models, but also on those that are involved in the ICO space, in order to make sure that securities laws are being respected, where they apply.