U.S. Securities and Exchange Commission (SEC) co-director of enforcement Stephanie Avakian mentioned in a Sept. 20 speech that the regulatory agency is most likely going to recommend “more substantial remedies” against those who fail to follow proper initial coin offering (ICO) registration requirements in the future
According to a transcript of the speech posted on the SEC’s website, Avakian articulated the specific set of principals that guide the agency’s decision-making when it comes to regulation, and then delved into how the SEC was tackling in “misconduct” in the ICO and virtual asset space.
Balancing The Risks and Rewards of ICOs
In the speech, Avarkian mentioned that the “novelty of ICOs” and the possible “utility of the underlying blockchain” makes these types of offerings exciting for certain investors.
However, she noted the market “exuberance” for ICOs can mask the reality that they are “often high-risk investments”, since they could lack viable products, have flawed business models, or just simply be “outright frauds.”
According to Avarkian, the SEC has tried to be cognizant about how to deal with ICOs registration cases that are not fraudulent. The agency wants to affirm valid ways to raise money while still making sure investors can enjoy the legal protections already in place.
She noted that the agency has issued a number of public statements to inform investors about concerning activity in the ICO space, particularity highlighting one last November that discussed the rise in ICO promotion by celebrities and other public figures.
Avarkian said the “anecdotal evidence” in the wake of the announcement pointed to a “dramatic decline” in the amount of celebrity-endorsed ICOs.
Overall, Avarkian said any issues related to ICOs and cryptoassets must be in the crosshairs of the Division of Enforcement, and pointed out that current work related to the space and other cyber-related issues was already “paying dividends.”
Staying Active On The Cryptocurrency Front
The recent speech by Stephanie Avakian seemingly caps off what has been a busy week for the SEC when it comes to virtual currency.
The regulatory agency also said on Thursday that they are starting a formal review process for the bitcoin ETF proposed by VanEck and SolidX.
The proposed ETF has made headlines since it would hold actual vitcoin in lieu of virtual currency futures contracts, and would maintain “comprehensive insurance” to safeguard investors against loss or theft of the bitcoin.
Just a couple of days before, SEC Commissioner Hester Peirce, often referred to as “CryptoMom”, asserted that the government should not hold back new products from coming out in the cryptocurrency market due to the perceived weaknesses associated with bitcoin.