He also said he’s proud of the work the agency has done to protect investors in the area of initial coin offerings (ICOs). “To call the ICO activity of late 2016 and 2017 a mess would be kind. Apparently at the time, intoxicated or distracted by an admittedly powerful technology, many market participants, both investors and, much more concerning, certain market professionals, accepted form over substance and pursued profit over responsibility,” he said.
One study has estimated that the amount raised in token offerings was $7 billion in 2017 and nearly $20 billion in 2018, and that it dropped to $4.1 billion in the first 10 months of 2019. By mid-2018, 86% of the prior year’s leading ICOs were trading below their offering price, with nearly a third of those ICOs having lost substantially all their value.
The SEC responded quickly, Clayton said, forming a cyber unit and issuing an investigative report confirming the application of securities laws to blockchain technology and bringing enforcement actions to restore order while leaving room for technology to drive cost savings, Clayton said.
The agency also “demonstrated its nimble nature in response to the effects of Covid-19,” including trading suspensions for three dozen companies, in light of questions regarding their operations, Clayton said.