The head of the U.S. Securities and Exchange Commission says he hopes ICO regulation will help cryptocurrency and blockchain technology grow.
At a gathering at Princeton University on April 5th, Chairman Jay Clayton said that “distributed ledger technology has incredible promise for the financial industry.” When asked if he believes all initial coin offerings are bad, he responded, “Absolutely not.” Clayton then went a step further to explain how his agency’s actions can have a positive impact on the emerging digital economy.
“Is the approach taken in Washington by the SEC adversely affecting distributed ledger technology in other areas? My quick answer is that my hope is that it’s actually helping – because this technology is being used for fraud and to the extent that it’s being used for fraud, history shows that government comes down harshly on that technology later.”
Clayton made the remarks during a discussion about cryptocurrencies and ICOs. Although the SEC has made headlines for cracking down on initial coin offerings, he offered some nuance on how utility tokens and security tokens are different.
“If I have a laundry token for washing my clothes, that’s not a security. But if I have a set of 10 laundry tokens and the laundromats are to be developed and those are offered to me as something I can use for the future and I’m buying them because I can sell them to next year’s incoming class, that’s a security… What we find in the regulatory world [is] the use of a laundry token evolves over time. The use can evolve toward or away from a security… Just because it’s a security today doesn’t mean it’ll be a security tomorrow, and vice-versa.”
The new remarks add some clarity to Clayton’s comments in February, when he told members of the U.S. Senate,“I believe every ICO I’ve seen is a security.”
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