SEC Chairman Issues Personal Statement on ICOs in Wake of SEC Enforcement Actions12.12.17
On December 11, 2017, the SEC’s Cyber Unit issued a cease and desist order halting a utility token-based initial coin offering (“ICO”) one day after the launch of the ICO. On the same day, SEC Chairman Jay Clayton issued a personal statement stating that Mr. Clayton believes that ICOs “can be effective ways for entrepreneurs and others to raise funding, including for innovative projects,” while simultaneously reinforcing the SEC’s position that “longstanding securities law principles” should be applied when determining whether a particular token constitutes an investment contract, and is, therefore, a security. Additionally, Mr. Clayton urged “market professionals, including securities lawyers, accountants and consultants, to read closely the investigative report…and…subsequent enforcement actions” the SEC has released on the topic of ICOs.
In other words, entities considering the possibility of conducting an ICO would be well advised to engage with “market professionals, including securities lawyers, accountants and consultants” well-versed in “longstanding securities law principles,” as well as the SEC’s most recent guidance on the topic.
Please contact one of the attorneys in Waller’s blockchain technology team for more information.