The Securities and Exchange Commission (SEC) has gone to great lengths in the past months to emphasise that ICOs must categorically be viewed as securities, and that exchanges which trade the assets must thus register themselves with the agency.

Despite this stress on proper regulation, however, one director has spoken out about his surprise with regards to the lack of self-reporting taking place. Brett Redfearn, who is employed by the division of trading and markets, revealed to CNBC:

“We’re underwhelmed by the enthusiasm for coming within the regulatory structure right now.”

Brett Redfearn

Speaking at the Sandler O’Neill Global Exchange and Brokerage Conference on Wednesday, the director added that:

“There are a number of exchanges that are trading ICOs [so] I would think that we would see more registrations.”

Brett Redfearn

SEC Commissioner Jay Clayton has also been vocal on the subject, making it clear that ICOs must necessarily be classified as securities. He said to CNBC:

“We regulate the offering of that security and regulate the trading of that security.”

Jay Clayton

The categorisation of an asset as a security is determined by a form of grading known as the ‘Howey Test’, which is taken from a 1946 ruling by the Supreme Court. This makes it clear that any investment of money in a common enterprise in which the investor expects to profit from another’s effort must always be viewed as such.

As Redfearn explains:

“We’ve created this pronged test, the Howey Test, where people look at the different characteristics and determine if it’s a security. Quite frankly not all of them are obvious on its face exactly what it is.”

Brett Redfearn

Redfearn declined to comment on whether popular digital currencies like ethereum and XRP belonged to the same classification, saying instead that there would be statements on “at least one of those products forthcoming in the future.”

Featured image from Max Pixel