SEC Chair Issues Cautionary Statement About ICOs

Securities and Exchange Commission Chairman Jay Clayton issued a statement this week cautioning investors and market professionals about the use of initial coin offerings (ICOs) to raise capital. The statement, the latest communication from the SEC about the burgeoning ICO market, suggests there is no bright line test for determining whether a token sale runs afoul of federal securities laws and cases will continue to be evaluated on their specific circumstances.

While acknowledging that ICOs can be an effective way for startups and others to raise money, Clayton warned “Main Street investors” of the dangers associated with cryptocurrency and ICO markets, which have less investor protections than traditional securities markets. Read more.