The United States Securities and Exchange Commission’s (SEC) chairman has acknowledged the power of an initial coin offering in helping entrepreneurs raise capital.
“I believe that ICOs (initial coin offering) can be effective ways for entrepreneurs and others to raise capital,” Jay Clayton, the SEC chairman, said in a speech outlining the progress of the Securities and Exchange Commission in 2018 and 2019 plans.
Even though the chairman believes in the power of an initial coin offering, terms and conditions have to be met by those issuing the initial coin offering. “When a security is being offered, our securities laws must be followed,” added Jay.
During the speech, the chairman touched on the possibility of manipulation in the virtual currency market. He noted that the current virtual assets and initial coin offering markets exhibit loopholes that leave investors vulnerable to manipulation compared to other traditional markets like the equities market.
While appearing on a crypto-related conference recently, Clayton also noted that although the cryptocurrency prices are open to volatility they should not be manipulated.
Concerning crypto price manipulation, two bills – the ‘U.S Virtual Currency Market and Regulatory Competitiveness Act of 2018’ and ‘The Virtual Currency Consumer Protection Act of 2018’ – were introduced by congressmen – Daren Soto and Ted Budd – in the United States. The bills were directed to financial regulators like the CFTC requiring them to develop clear regulations around cryptocurrencies which will, among other things, position the U.S as a financial technology hub and scale down on manipulation.
The chairman also touched on the recently SEC-created hub, Strategic Hub for Innovation and Financial Technology (FinHub). The creation of the hub was SEC’s way to get involved in the financial technology sector and to help those issuing an initial coin offering to do so within the law.
Due to SEC’s regulatory control, do you think startups will shift from an initial coin offering to a security token offering as a way of raising capital?
Let us know in the comments section below.