The U.S. Securities and Exchange Commission (SEC) does not plan to ban initial coin offerings (ICOs), a top official said on Monday.
SEC Commissioner Robert Jackson said during an interview with CNBC that the agency is instead committed to bringing ICOs into compliance with the country’s current securities framework, which dates back to the 1930s.
“Investors are having a hard time telling the difference between investments and fraud,” Jackson said. “Down the road, I think we will be thinking about ways to make those investments work consistent with our securities laws.”
Jackson chided ICO industry participants for repeatedly flouting federal securities laws in their token sales, arguing that they have effectively acted as though it is an unregulated market.
This, he said, has hurt investors, many of whom have fallen victim to fraud schemes involving cryptocurrency.
“If you want to know what our markets would look like with no securities regulation, what it would look like if the SEC didn’t do its job? The answer is the ICO market,” Jackson said. “Right now we are focused on protecting investors who are getting hurt in this market.”
To date, most ICO operators have described their tokens as “utility tokens,” which they allege are exempt from securities regulations. However, the SEC has said that while utility tokens may exist there are few ICOs that can find safe harbor under this definition.
Last week, SEC Chairman Jay Clayton said that every ICO token he has observed is a security, though he clarified that bitcoin and other “pure” mediums of exchange are exempt from that classification.
Meanwhile, former Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler said that he would classify ethereum and Ripple’s XRP token as securities since they were both initially distributed through sales conducted by centralized entities — and XRP still is.
Featured Image from SEC/Flickr