SEC Chair Warns About Cryptocurrency and ICO markets

While the world is in cryptocurrency frenzy, global regulators are feeling concerned about the high volatility of the digital coins. As SEC Chair Warns About Cryptocurrency and ICO markets, US investors should exercise extreme caution.

12 December, AtoZForex The chief of the key US financial regulator, the Securities and Exchange Commission (SEC), Jay Clayton, has published a message for the investors this Monday. Mr. Clayton has cautioned investors about the dangers of putting money into the cryptocurrency market.

SEC Chair Warns About Cryptocurrency and ICO markets

The head of SEC also stated that trading and public offerings in the cryptocurrencies might be in violation of federal securities law. The statement from Jay Clayton has emerged after the US SEC has stopped an Initial Coin Offering (ICO) from a restaurant review application. That time, the entity did not bother registering as a security. Mr. Clayton has stated:

“A number of concerns have been raised regarding the cryptocurrency and ICO markets, including that … there is substantially less investor protection than in our traditional securities markets, with correspondingly greater opportunities for fraud and manipulation.”

He further added:

“If an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost.”

Cryptocurrency market lacks the investor protection

Mr. Clayton has also warned industry participants that ICOs would need to comply with federal rules that administer the issuance of securities. The compliance includes the registration with the SEC or qualifying for an exemption that enables issuers to sell shares privately to the accredited platform. SEC Chair has further states that many platforms trading in digital currencies might also be in violation of laws. The legislation requires them to register as an exchange.

Mr. Clayton further noted that there have been a number of concerns raised in regards to the cryptocurrency and ICO markets. This includes the worries over their operation mode. Specifically, SEC Chief is concerned about the lack of investor protection. He believes that investors have much more protection in the traditional securities markets.

SEC Chairman further urges market professionals to study the investigative report that SEC has released earlier this year. In conclusion, Mr. Clayton has warned market participants against promoting or touting the offer and sale of coins without finding out whether they fall under the securities law.

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