U.S. Securities regulator Boss on Wednesday shed light on how his agency defines what is or not a security. Stating that tokens used in initial coins offering (ICOs) are securities. Whereas cryptocurrency such as Bitcoin are not since they act as a replacement for sovereign currency.
In an interview with CNBC, U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton stated that “We are not going to do any violence to the traditional definition of a security that has worked for a long time,” adding that “We’ve been doing this a long time, there’s no need to change the definition.”
However, Clayton noted that any digital currencies which represent an investment in a venture affecting the value of token can be categorized as a security and will be any other securities under the watch dog’s jurisdiction.
“A digital asset where I give you my money, and you go off and start a venture, and in return for giving you my money you say you know what, I’m going to give you a return, or you can get a return on the secondary market by selling your token to somebody – that is a security, and we regulate that. We regulate the offering of that security, and we regulate the selling of that security.” SEC Chief Explained
Notably, SEC Boss said the U.S. had created a $19 trillion securities market that’s “the envy of the world” following the current rules. Clayton maintained that SEC would not bend the rules for the fundraising process known as ICOs, either, he said. ICOs have raised $9.1 billion this year alone, according to the latest research from Autonomous Next.
Clayton declined to comment on specific altcoins as to whether they were or were not securities, but referred the interviewer, CNBC’s Bob Pisani to his definition — anything representing an underlying asset or the value of a project will continue to be considered a security.
Altcoins Ripple (XRP) and Ethereum (ETH) have come up in the digital currency security question as to whether they are a security or not, with Ripple CEO categorically stating XRP is not a security, Joseph Lubin Ethereum co-founder also denying that ETH was ever a security.