News & Insights

SEC Chairman Clayton Provides Statement on Cryptocurrency and Initial Coin Offerings

SEC Chairman Clayton Provides Statement on Cryptocurrency and Initial Coin Offerings


On December 11, 2017, SEC Chairman Jay Clayton released a statement on cryptocurrencies and initial coin offerings (ICO) to serve as guidance as both markets continue to expand.  The statement provides Clayton’s concerns for the markets due to substantially less investor protection and greater opportunity for fraud.  Clayton provides the following guidance for market professionals to consider:

  • Initial coin offerings, while effective at raising funding, often qualify as securities and thus must include relative disclosures and other requirements of securities laws;
  • The structuring of a token as a “utility” does not prevent the token from qualifying as a security;
  • Prior to launching a cryptocurrency or product tied to cryptocurrencies, verify it is not a security or otherwise complies with securities laws;
  • Firms that allow customers to use cryptocurrency in transactions should be aware of potential risks associated with their anti-money laundering obligations;
  • No ICO or cryptocurrency has been registered with the SEC to date; and
  • The SEC has not approved for listing and trading any ETFs holding cryptocurrencies or other related assets.

While securities laws do not specifically outline guidelines for cryptocurrencies, the SEC has engaged in related enforcement cases.  Clayton has requested for the Division of Enforcement to continue with initiatives of ICOs and cryptocurrencies.


Firm’s should refer to counsel before engaging in any business operations involving cryptocurrencies or ICOs to assess whether they are at risk of violating securities laws.  Furthermore, compliance programs should review both the operations of the firm and employee account activity to ensure that appropriate policies are in place to govern preclearance and reporting obligations.  As always, Fairview® will continue to provide more information as it is made available.