Cryptocurrencies are rising, market capitalization estimates are hovering in the hundreds of billions, and startups are leveraging initial coin offerings (ICOs). Needless to say, the SEC is taking notice. Recently, the agency published a memo that further defines its stance on virtual currencies.
SEC CRYPTOCURRENCY GUIDANCE: CAUTIOUS OPTIMISM
The latest SEC cryptocurrency guidance letter exudes the same tone as previous iterations: very cautious optimism.
This time around, the agency focused on issues connected to the Investment Company Act of 1940. Specifically, commissioners raised concerns about valuation volatility as it relates to current liquidity and financial custody standards.
Once again, the SEC delineated anxieties about the inherent money laundering potentials presented by decentralized, digital monetary systems.
WHAT TOKEN INVESTORS NEED TO KNOW RIGHT NOW
So, what should token investors take away from the SEC’s latest crypto-focused missive?
- The SEC isn’t rushing to implement sweeping regulations just yet, but they’re definitely keeping a sharp eye on the situation.
- Startups and investors must comply with current regulations, and some do apply to digital currencies.
- Pay attention to the Securities and Exchange Commission’s guidance, and enlist a cryptocurrency lawyer to stay compliant.
Excerpt from SEC cryptocurrency memo:
We at the SEC are committed to promoting capital formation. The technology on which cryptocurrencies and ICOs 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.
I encourage Main Street investors to be open to these opportunities, but to ask good questions, demand clear answers and apply good common sense when doing so. When advising clients, designing products and engaging in transactions, market participants and their advisers should thoughtfully consider our laws, regulations and guidance, as well as our principles-based securities law framework, which has served us well in the face of new developments for more than 80 years. I also encourage market participants and their advisers to engage with the SEC staff to aid in their analysis under the securities laws. Staff providing assistance on these matters remain available at FinTech@sec.gov .
CONTACT A CRYPTOCURRENCY COMPLIANCE LAWYER
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Article Sources
Clayton, J. (2017, December 11). Statement on Cryptocurrencies and Initial Coin Offerings. Retrieved February 20, 2018, from https://www.sec.gov/news/public-statement/statement-clayton-2017-12-11
