Jay Clayton issues cryptocurrency warning

SEC chairman urges investors to use common sense, market pros to mind securities laws.
DEC 12, 2017
In a public statement about cryptocurrencies like bitcoin and initial coin offerings or ICOs, SEC Chairman Jay Clayton urged investors to ask lots of questions and use common sense before investing, suggested that some products might not be legal. "The technology on which cryptocurrencies and initial coin offerings are based may prove to be disruptive, transformative and efficiency enhancing," he said. "I am confident that developments in fintech will help facilitate capital formation and provide promising investment opportunities for institutional and Main Street investors alike. I encourage Main Street investors to be open to these opportunities, but to ask good questions, demand clear answers and apply good common sense when doing so." Market participants and their advisers, he added, "should thoughtfully consider our laws, regulations and guidance, as well as our principles-based securities law framework, which has served us well in the face of new developments for more than 80 years." Trading in futures on bitcoin, perhaps the most prominent cryptocurrency, began Monday on the CBOE Futures Exchange. Cryptocurrencies, said Mr. Clayton, present investors and other market participants with many questions: Is the product legal? Is it subject to regulation, including rules designed to protect investors? Does the product comply with those rules? Is the offering legal? Are those offering the product licensed to do so? Are the trading markets fair? Can prices on those markets be manipulated? Can I sell when I want to? Are there substantial risks of theft or loss, including from hacking? (More: Bitcoin is likely to gain widespread acceptance.) "The answers to these and other important questions often require an in-depth analysis, and the answers will differ depending on many factors," he said. He said that simply calling something a "currency" or a currency-based product does not mean that it is not a security.

Latest News

Mesirow acquires part of flexPATH in second retirement deal of 2026
Mesirow acquires part of flexPATH in second retirement deal of 2026

Chicago-based Mesirow Fiduciary Solutions adds flexPATH's plan-level outsourced fiduciary book, boosting its retirement market reach to $164 billion.

Advisor moves: LPL lands $350M veteran advisor duo in Florida
Advisor moves: LPL lands $350M veteran advisor duo in Florida

Also, Raymond James's employee advisor channel adds breakaways from Wells Fargo and Stifel, while UBS welcomes an ex-Morgan Stanley duo in Indiana.

SEC accuses crypto firm founder of running $425 million Ponzi scheme
SEC accuses crypto firm founder of running $425 million Ponzi scheme

It promised guaranteed principal and 10% monthly returns. The SEC says it invested nothing.

MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products
MassMutual Ascend tops $2 billion in RIA annuity sales as advisors warm to income products

Ten years after entering the fee-based annuity market, MassMutual Ascend says nearly half its lifetime sales came in the past two years alone – but barriers remain among fee-only advisors.

Fintech bytes: Wealth tech firms target advisor productivity with new integrations
Fintech bytes: Wealth tech firms target advisor productivity with new integrations

Amplify, WealthReach, Zeplyn and Zocks have unveiled partnerships aimed at automating portfolio management, content creation, account opening, and client communication.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income