At the SEC, Chairman Jay Clayton has warned that initial coin offerings -- which are also backed by the blockchain ledger technology that underpins bitcoin -- are probably ripe with fraud.
Earlier this year, the SEC cautioned that in many instances the offerings are essentially securities that must be registered. In November, the SEC warned that celebrities who endorse ICOs risk running afoul of securities laws if they don’t disclose their compensation.
“Most people believe that bitcoin is not a security,” Clayton said this week. “The question is, jurisdictionally, where does the SEC fall. The various regulators are thinking about it. There are jurisdictional issues around bitcoin and bitcoin trading and where it’s taking place.”
The Federal Reserve, meanwhile, is taking a cautious approach. Federal Reserve Chair nominee Jerome Powell has said bitcoin isn’t big enough to affect monetary policy. And Randal Quarles, who was confirmed in October as the Fed’s first-ever vice chair responsible for regulating banks, has said authorities should keep a close eye on digital currencies, slowly adopting useful innovations if deemed safe.
The problem among regulators is that they each have roles with bitcoin, but that there’s too little coordination, said Justin Slaughter, a former top aide to a CFTC commissioner who now consults on financial technology and regulation as a partner at Mercury Strategies.
“It’s been very scattershot, it’s been somewhat confused,” he said.
This article was provided by Bloomberg News.