“We are watching.” This is the message that the US Securities and Exchange Commission (SEC) chairman, Jay Clayton, has to say to firms planning on launching their own token sales.
In a recent interview with Fox Business, Clayton admits that while he “loves this technology,” he also firmly believes that the companies making business out of it should comply with existing securities law, regardless of whether the token sale is private or public in nature.
“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.”
He also stressed on the point that among the tokens the SEC has so far reviewed, most fall under the square definition of a security.
“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.”
He then pointed to public and private solutions that can be applied in case of violations of federal securities laws.