“The world’s social media platforms and financial markets are abuzz about cryptocurrencies and initial coin offerings,” Clayton said. “There are tales of fortunes made and dreamed to be made.”
“Investors should understand that to date no initial coin offerings have been registered with the SEC. The SEC also has not to date approved for listing and trading any exchange-traded products (such as ETFs) holding cryptocurrencies or other assets related to cryptocurrencies. If any person today tells you otherwise, be especially wary.”
Many companies have shied away from the ICO designation, opting instead for “utility ICO” or “token generation event” as to distance themselves from the regulated world of securities. Clayton said games with semantics won’t fly with the SEC.
“Many of these assertions appear to elevate form over substance,” he said. “Merely calling a token a “utility” token or structuring it to provide some utility does not prevent the token from being a security.”
The international nature of cryptocurrencies can also pose a threat to investors, Clayton said:
