The US Securities and Exchange Commission (SEC) Chairman, Jay Clayton, recently cautioned users to be wary of the cryptocurrency industry, as it has been subject to several scams and nefarious activities in the past year.
Up until now, the SEC has been relatively quiet regarding the world’s quickest growing industry. However, the agency’s chairman recently gave an address which suggested that the SEC might soon become more involved in cryptocurrency regulation. The chairman cautioned users to be extremely cautious when participating in the industry. In addition, Clayton added that investors should be wary of any ICO that sounds too good to be true. He advised that investors should always be willing to lose it all in this volatile market. It is critical for investors to always do their research before investing, by weighing the risks and researching the ICO’s legality.
According to Clayton, the cryptocurrency industry raised several concerns among investors and regulating agencies, as the industry offers no protection to its investors. Moreover, concerns regarding the industry are rising due to the fact that there are frequent scams, such as market manipulation and hacks. However, even Clayton acknowledged the potential benefits of ICOs, as they are an extremely effective method for entrepreneurs to raise enough startup capital. This, in turn, encouraged an environment which is conducive to innovation in several fields.
Clayton expressed his concern that cryptocurrency and its underlying blockchain technology may very well be changing the very landscape of financial trading and economic environment, but that regulation was not evolving quick enough to address concerns in the industry. Any security offering is required to disclose all information to potential investors truthfully, as per SEC laws.
Clayton's address implied that the SEC clearly believed that they have a duty to regulate the cryptocurrency market, however, the agency has been significantly inactive in imposing regulation as of yet, especially compared to other international economic key players such as China and South Korea.
Clayton was appointed by the SEC following a recommendation from current US President, Donald Trump. Clayton’s leadership has encouraged the SEC to start developing its cryptocurrency policies, albeit cautiously and at a slow pace. Interestingly, shortly after Clayton's address, the SEC issued a press release which confirmed that they've apprehended an ICO campaign whose proposal was not in compliance with SEC guidelines.
The ICO campaign, Munchee, was aiming to raise $15 million to bring about modifications to an already existing iOS app that allowed users to write restaurant reviews. In addition, Munchee wanted to establish a marketplace where Munchee coin holders could buy and sell goods and services with their coins. However, the SEC found various statements in their proposal troubling, and subsequently shut the firm and its ICO campaign down. According to the regulator, Munchee’s proposal, especially the secondary market, meant that the firm fell under the SEC’s jurisdiction. Munchee was cooperative with the regulating agency and escaped any further legal action.
According to the SEC’s co-director of its enforcement division, Stephanie Avakian, the agency intends to closely monitor and scrutinize the ICO and cryptocurrency industry for all offerings, especially those that intend to offer investor securities that have not been properly registered. Avakian added that the SEC chose not to penalize Munchee any further, but did urge them to return investors’ money. Munchee has been compliant with all requests from the SEC and has since ceased their operations.
Up until now, the SEC has been relatively quiet regarding the world’s quickest growing industry. However, the agency’s chairman recently gave an address which suggested that the SEC might soon become more involved in cryptocurrency regulation. The chairman cautioned users to be extremely cautious when participating in the industry. In addition, Clayton added that investors should be wary of any ICO that sounds too good to be true. He advised that investors should always be willing to lose it all in this volatile market. It is critical for investors to always do their research before investing, by weighing the risks and researching the ICO’s legality.
According to Clayton, the cryptocurrency industry raised several concerns among investors and regulating agencies, as the industry offers no protection to its investors. Moreover, concerns regarding the industry are rising due to the fact that there are frequent scams, such as market manipulation and hacks. However, even Clayton acknowledged the potential benefits of ICOs, as they are an extremely effective method for entrepreneurs to raise enough startup capital. This, in turn, encouraged an environment which is conducive to innovation in several fields.
Clayton expressed his concern that cryptocurrency and its underlying blockchain technology may very well be changing the very landscape of financial trading and economic environment, but that regulation was not evolving quick enough to address concerns in the industry. Any security offering is required to disclose all information to potential investors truthfully, as per SEC laws.
Clayton's address implied that the SEC clearly believed that they have a duty to regulate the cryptocurrency market, however, the agency has been significantly inactive in imposing regulation as of yet, especially compared to other international economic key players such as China and South Korea.
Clayton was appointed by the SEC following a recommendation from current US President, Donald Trump. Clayton’s leadership has encouraged the SEC to start developing its cryptocurrency policies, albeit cautiously and at a slow pace. Interestingly, shortly after Clayton's address, the SEC issued a press release which confirmed that they've apprehended an ICO campaign whose proposal was not in compliance with SEC guidelines.
The ICO campaign, Munchee, was aiming to raise $15 million to bring about modifications to an already existing iOS app that allowed users to write restaurant reviews. In addition, Munchee wanted to establish a marketplace where Munchee coin holders could buy and sell goods and services with their coins. However, the SEC found various statements in their proposal troubling, and subsequently shut the firm and its ICO campaign down. According to the regulator, Munchee’s proposal, especially the secondary market, meant that the firm fell under the SEC’s jurisdiction. Munchee was cooperative with the regulating agency and escaped any further legal action.
According to the SEC’s co-director of its enforcement division, Stephanie Avakian, the agency intends to closely monitor and scrutinize the ICO and cryptocurrency industry for all offerings, especially those that intend to offer investor securities that have not been properly registered. Avakian added that the SEC chose not to penalize Munchee any further, but did urge them to return investors’ money. Munchee has been compliant with all requests from the SEC and has since ceased their operations.