SEC Chairman Jay Clayton Says Bitcoin Not a Security, Most ICOs Likely Are
During the discussion of the “incredible promise” of blockchain technologies and their effect on market efficiency, Clayton revealed his thoughts on cryptocurrencies, which are considered to be “replacements for sovereign currencies”.
The headman of the US Securities and Exchange Commission (SEC) claims that Bitcoin (BTC) should not be referred to a security because it is positioned as a replacement for sovereign currencies, according to CNBC report on June 6.
During the discussion of the “incredible promise” of blockchain technologies and their effect on market efficiency, Clayton revealed his thoughts on cryptocurrencies, which are considered to be “replacements for sovereign currencies”. He says, if you replace the dollar, the yen, the euro with Bitcoin, you’ll just get another currency which is not a security.
The SEC chairman did not share his views on alternative assets to BTC, although some of them have an officially acknowledged status of securities. Instead, Clayton discussed tokens and how they act as digital assets, or securities, generally speaking. He gives an example when somebody lends money to another person for his venture, and then that another person wants to give a return; Clayton names such return a security, which is regulated by government.
In the request to clarify his comment on whether Initial Coin Offerings (ICO) are securities, Clayton told the host, Bob Pisani of CNBC, that he “just did,” prompting that ICOs need to be regulated, although most of them are classified as securities.
Furthermore, Clayton claimed that SEC won’t support changing the definition of a security to support the ICO community. He thinks that such action may do “violence to the traditional definition of a security which has worked well for a long time.”
The SEC chair has a positive stance to distributed ledger technologies, as we may judge by his speech at cryptocurrency hearing of SEC and Commodity Futures Trading Commission in February. Back then, Clayton had specified that every ICO that the SEC had encountered so far would be identified as a security.
Altcoins Ethereum (ETH) and Ripple (XRP) have been under discussion on whether they are security or not. Joseph Lubin of Ethereum makes a point claiming that ETH was never a security, just like Ripple refuses to fall into a security classification.
Ripple is now facing a class action lawsuit from a displeased investor which considers the selling XRP as an unregistered security. Interestingly, former SEC chair recently appointed to represent Ripple in court.
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