American Securities and Exchange Commission (SEC) Chairman Jay Clayton has been advised to explain how the governmental agency interprets ICOs and when this specific form of a crypto asset can be tagged as securities.
Regulators Tackle Crypto Industry
Lead by North Carolina Representative Ted Budd and followed by other 14 lawmakers, a letter was signed and sent to Jay Clayton, asking the agency to embellish the general laws bounding initial coin offerings, reports CNBC.
The cryptocurrency market in the US is currently not well defined, with the policies surrounding this nascent industry frequently being modified. Currently, there is no framework to speak of that for firms and investors to completely abide by. The Congress emphasizes on trying to get the SEC to elaborate on the guidelines an investor is to follow while making investments in cryptocurrencies and other digital assets.
Inside the letter, several mentions are made towards what is expected out of the SEC, as many believe that the laws that govern cryptocurrency investments should be more transparent. “We believe that the SEC could do more to clarify its position”, Congressmen said in the letter, adding — “It is important that all policymakers work toward developing clearer guidelines between those digital tokens that are securities, and those that are not, through better articulation of SEC policy, and, ultimately, through formal guidance or legislation,”
Congress fears that the lack of set guidelines and regulations could flee the digital ecosystem market overseas. “Current uncertainty surrounding the treatment of offers and sales of digital tokens is hindering innovation in the United States and will ultimately drive business elsewhere. We believe that the SEC could do more to clarify its position.” continued the letter.
The letter also emphasized rethinking punishments towards the crypto market and instead resorting to a more formal approach of guidance. “We are concerned about the use of enforcement actions alone to clarify policy and believe that formal guidance may be an appropriate approach to clearing up legal uncertainties which are causing the environment for the development of innovative technologies in the United States to be unnecessarily fraught,” the letter said.
The letter has been speculated to be an effort of a four-hour meeting this week on Capitol Hill, having had many prominent members such as some representatives from Wall Street and cryptocurrency firms. Relevant investors were said to be also a part of the apparent meeting.
The general agenda of the letter is to get the SEC to delve on the following:
- “The SEC should clarify the criteria used to determine when offers and sales of digital tokens should properly be considered “investment contracts” and therefore offerings of securities.”
- “Do you agree that a token originally sold in an investment contract can, nonetheless, be a non-security as Mr. Hinman stated? Can the resultant token be analyzed separately from the original purchase agreement, which may clearly be an investment contract? And, if so, could the resultant token, nonetheless be a non-security?”
- “Please describe the tools available to the SEC to offer more concrete guidance to innovators on these topics.”
The letter was a combined effort of Rep. Ted Budd, R-N.C., Reps. Emmer and Davidson, as well Darren Soto, D-Fla. Furthermore, David Schweikert, R-Ariz., Jeff Duncan, R- S.C., Alex Mooney, R- W.V., John Curtis, R-Utah, Ralph Norman, R- S.C., Andy Biggs, R-Ariz., Mark Meadows, R-N.C., Derek Kilmer, D-Wash., Greg Gianforte, R-Mont., and Sean Duffy, R-WI were also co-signers.
There has been no deadline speculated by Congress as for a response, but it has advised the SEC to keep in mind the speed at which this industry is developing.