SEC Chair Gensler Agrees With Former Chair Clayton: ‘Every ICO Is a Security’
According to Gary Gensler, U.S. Securities and Exchange Commission (SEC) Chair, the overwhelming majority of crypto tokens and preliminary coin choices (ICOs) violate U.S. securities legal guidelines.
In a speech at the Aspen Safety Discussion board on Tuesday, Gensler said that he agrees together with his predecessor, former SEC Chair Jay Clayton, who previously said that in his view, “each ICO I’ve seen is a security.”
Gensler explained:
“Generally, folks buying these tokens are anticipating profits, and there’s a small group of entrepreneurs and technologists standing up and nurturing the projects.
I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight.”
These tokens may allow markets to be manipulated, which in turn could harm investors, said the regulator.
Gensler referred to his earlier comments that stock tokens and “stable value tokens backed by securities” qualify as securities in his view, meaning they must be registered and their issuers must abide by existing federal law.
Gensler elaborated:
“A typical trading platform has more than 50 tokens on it. In fact, many have well in excess of 100 tokens. While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities.”
He also hinted that his agency might approach exchange-traded funds (ETFs). More than a dozen industry participants have filed applications to launch a bitcoin ETF over the past year.
The investment vehicles with exposure to crypto, including mutual funds, already exist. While Gensler didn’t comment on the proposals themselves, he called out the importance of having investor protections codified into law.
“Given these important protections, I look forward to the staff’s review of such filings, particularly if those are limited to these CME-traded bitcoin futures,” Gensler said, referring to the Chicago Mercantile Exchange.
