More than a dozen members of Congress have signed a letter asking Securities and Exchange Commission (SEC) Chairman Jay Clayton to clarify the guidelines the agency uses to determine whether cryptocurrency assets are securities under federal law.
The letter, which according co-signer Rep. Ted Budd (R-NC) has already been signed by 15 lawmakers across the political spectrum, tells Chairman Clayton that members of Congress are concerned that the SEC’s failure to issue definitive guidance on what precisely makes an ICO token a security is causing startups to abandon the U.S. in favor of jurisdictions where the rules are more clear.
“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.”
Later in the letter, which Rep. Budd said is the “byproduct of months of work and conversations” with industry trade groups and other lawmakers from both the Republican and Democratic parties, the legislators question the SEC’s decision to use enforcement actions in lieu of formal guidance to clarify policy on cryptoassets.
“We believe that the SEC could do more to clarify its position. Additionally, 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 lawmakers further asked Clayton to answer three specific questions regarding the legal status of ICO tokens and other cryptocurrency assets, including whether he agreed with a statement by William Hinman, director of the SEC’s division of corporation finance, which indicated that a token that was originally sold as an investment contract — i.e., a security — could later shed that label. Hinman had specifically stated that he did not believe ether should be regulated as a security, despite the fact that it was originally funded through a token presale.
The publication of this letter comes just days after Rep. Warren Davidson (R-OH) — one of the letter’s co-signers — hosted an ICO summit on Capitol Hill in which representatives from the cryptocurrency and mainstream financial industries asked Congress to provide a clear regulatory framework for blockchain innovation.
As CCN reported, a group of lawmakers recently sent a letter to the Internal Revenue Service (IRS) that criticized the agency for stepping up its enforcement of tax violations involving cryptocurrency without providing taxpayers with formal guidance on how to report income associated with complex situations such as cryptocurrency hard forks.
Read the full text of the letter below:
Congress SEC Letter by CCN on Scribd