SEC Chief: ICOs Are "Absolutely Not" All Fraudulent

  • SEC Chief Jay Clayton has expressed a wish for greater oversight for ICOs, while stating they are "absolutely not" all fraudulent
  • Regulations are internationally trending; with Australia, the UK and Japan following suit

SEC chairman Jay Clayton has recently stated that not all Initial Coin Offerings (ICOs) are fraudulent, and argued that oversight will strengthen the cryptocurrency industry.

Since their conception, ICOs and blockchain companies have been exposed to a great deal of skepticism and legal inquiry. This has become increasingly apparent in the last few years; with the likes of Riot Blockchain, and its activities in 2017.

More recently, ICO operators such as Centra Tech have shown that this particular area is laden with illegal practices. Back in November 2017, Ripple co-founder, Brad Garlinghouse stated that the number of fraudulent ICOs on the market far outweighs the number of legitimate ones. He said:

"I think a lot of what's happening in the ICO market is actually fraud, and I think that will (eventually) stop."

Brad Garlinghouse

Speaking with CNBC, Garlinghouse referred to them as operating in a legalistic 'gray area', with legislation yet to catch up. But while this is the accepted thinking for Garlinghouse, the SEC, in spite of its actions against fraudulent practices, is taking a more balanced approach.

SEC Chief Defends ICOs

Jay Clayton, the chairman of the SEC, stated that financial and regulatory oversight will strengthen the cryptocurrency and blockchain markets. This thinking is seemingly becoming an international one, as Australia and Japan have taken steps toward regulation.

Clayton, speaking with students at Princeton University, has countenanced against condemning the vast majority of ICOs as fraudulent, saying that it's 'absolutely not' the case for many companies starting an ICO, doubling down on the SEC's ongoing steps to improve accountability.

“I think if we don’t stop the fraudsters, there is a serious risk [of a] regulatory pendulum — the regulatory actions will be so severe that they will restrict the capacity of this new security."

Jay Clayton

The UK has also introduced new steps through its regulatory body, the Financial Conduct Authority (FCA), which recently issued a statement on cryptocurrency derivatives.