Unless you’ve been living under a rock for the past 4 months, you’ve probably at least heard about all those people who’ve either mortgaged their houses and struck it rich, or lost their life savings, by investing in crypto. Naturally, cryptocurrency’s disruptive properties have caught the attention of the US Securities and Exchange Commission (SEC) – which, unsurprisingly, has some opinions on the matter.
5 Things to Know About Crypto, Courtesy of the SEC
As noted by NASDAQ, Securities and Exchange Commission (SEC) Chair Jay Clayton shared his thoughts on cryptocurrency in recent months – which can largely be distilled into five important points.
- There are No SEC-Registered ICOs
At present, not one single Initial Coin Offering (ICO) currently in progress or whose launch has been announced is registered with the SEC. Clayton notes:
Investors should understand that to date, no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies.
- The SEC Can’t Always Have Your Back
The unregulated cryptocurrency market knows no borders and is subject to no official jurisdiction. As such, US regulatory authorities can only do so much. If the exchange you use gets hacked or the team behind that ICO you invested in runs off into the sunset with investors funds, there is a very real chance that those funds will remain unrecoverable. Clayton explained:
These markets span national borders and significant trading may occur on systems and platforms outside the United States. Your invested funds may quickly travel overseas without your knowledge. As a result, risks can be amplified, including the risk that market regulators such as the SEC may not be able to effectively pursue bad actors or recover funds.
- Sorry, but Some ICO Tokens are Definitely Securities
There is a common misconception floating about that ICO tokens aren’t securities, and therefore are not subject to federal securities laws. That, however, is simply not the case. Says Clayton:
The Commission applied long-standing securities law principles to demonstrate that a particular token constituted an investment contract and therefore was a security under our federal securities laws.
- The SEC Treats Cryptos like Currency
Additionally, Clayton is kind enough to let everyone know that the SEC isn’t going to stop monitoring cryptocurrencies. In fact, they’re going to ramp up their attention, treating cryptos just like the global market’s dominant fiat currencies:
It is clear that just as the SEC has a sharp focus on how U.S. dollar, euro, and Japanese yen transactions affect our securities markets, we have the same interests and responsibilities with respect to cryptocurrencies.
- The SEC Likes Crypto
Last but not least, the SEC doesn’t have much of a problem with Bitcoin and other cryptocurrencies. In fact, they’re believers — and they know that Wall Street is, too. Clayton admits:
The technology on which cryptocurrencies and ICOSs are based may prove to be disruptive, transformative and efficiency-enhancing. I am confident that developments in fintech will help facilitate capital formation and provide promising investment opportunities for institutional and Main Street investors alike.