SEC Chairman: Bitcoin [BTC] is not a security, but many ICOs can be considered as one

United States Securities and Exchanges Commission’s Chairman, Jay Clayton, spoke about the recent crackdown on Initial Coin Offerings [ICO], in an interview with CNBC. The chairman also gave an insight into the much-awaited Bitcoin ETF.

Clayton started by speaking about the recent actions taken by the commission against two ICOs and a cryptocurrency exchange. The cryptocurrency firms involved in the discussion are EtherDelta, CarrierEQ Inc [Airfox], and Paragon Inc.

Zachary Coburn, the founder of EtherDelta, an exchange for Ethereum-based tokens, was scrutinized by the SEC earlier this month. This was mainly because the founder failed to register the exchange, which mandatory as it was trading tokens which could be classified as securities. The founder was slammed with a fine of $300,000 as a result to this.

The other two startups also gained the attention of the commission because of the same reason. They were both fined $250,000 each for conducting an ICO without registering with the SEC. They are also required to submit a report to the commission on a timely basis and compensate the investors who incurred a loss as a result of taking part in the ICO.

On this matter, the chairman stated:

“I think we’ve been clear that we don’t believe Bitcoin is a security, but many ICOs that you see and you talk about, they are securities and if you’re going to offer and sell securities, you have to do so in compliance with our laws […] The recent actions further emphasized that our securities laws do apply to the ICO space.”

He went on to say that if startups are going to raise money through initial coin offerings, then they should either do it in a private placement or register with the commission. He added that registration with the SEC required information related to the firm’s financial statements and disclosure of certain information.

The chairman further stated:

“We’ve had no ICOs registered with the Securities and Exchange Commission. To the extend ICO is being conducted offshore or pursuant to a private placement exemption, fine to the extent that you have conducted a public offering an ICO its non-compliant.”

Succeeding this, Clayton spoke about the Bitcoin ETF, the one product the whole cryptocurrency space is eagerly waiting for. The chairman stated that he would not comment on the timing of the ETF. He went on to say that the commission is concerned about certain issues, including trading in Bitcoin and the existence of the reliable price source.

He continued to say:

“Whether there’s reliable price information on trading markets and as well as custody as well as whether people who hold those assets can count on those assets to be there in the same way you can with other assets that underlie an ETF”