On January 22, 2018, in his opening remarks at the Securities Regulation Institute, SEC Chairman Jay Clayton expressed concerns regarding the role that legal advisors have recently been playing in the emerging market for blockchain-based initial coin offerings (ICOs).
Chairman Clayton highlighted two questionable scenarios regarding the legal advice given in connection with ICOs:
- Lawyers helping companies structure an ICO that has many of the key features of a securities offering while simultaneously taking the position that the product being offered is not a security and therefore is not subject to US securities laws.
- Lawyers providing equivocal advice or refusing to take a position on:
- o whether the coin or token being offered in an ICO is a security; and
- o whether the offering qualifies for an exemption from registration under US securities laws.
In his speech, Clayton also expressed concerns regarding recent examples of public companies that have had no prior experience with blockchain technology that have suddenly shifted their business models or branding before offering securities “to capitalize on the perceived promise of distributed ledger technology.”
Follow the link below to see the Chairman’s full remarks.