An ICO often happens when a company or a startup sell a cryptocurrency to raise money. By 2018, various companies had raised over $7 billion in so-called ICOs, according to the site ICOdata.
Recently, there has been a lot of talk about whether or not an ICO is a sale of securities, and that companies in that case need authorization for the sale.
Now, Jay Clayton, Chairman of the SEC, U.S. Securities and Exchange Commission, says that many ICOs are just selling securities.
“If you finance a venture with a token offering, you should start with the assumption that it is a security”, Jay Clayton says in a panel at the crypto conference Coindesk Consensus.
However, Jay Clayton mentions the cryptocurrency xrp as an example that is not clear if it’s really a security, and thinks these are cases that they have to investigate further.
Clayton: Obviously a sale of securities
According to Clayton, there are many ICOs that are blatantly sales of securities. Investors usually invest in ICOs in order to sell their assets at a higher price or get some kind of return on investment.
Jay Clayton says that this is the reason why one most often buy a normal security, and that ICOs should be regulated thereafter.
“I’m selling you my token, I’m going to go off and produce a venture and, hopefully, you’ll get a return for having purchased that token”, Jay Clayton says in the panel on the crypto conference Coindesk Consensus, Coindesk reports.