SEC Updates: ICO Gatekeeper Standards, SEC/CFTC Swap Rules

SEC Chairman Jay Clayton had some stern advice for market professionals, especially gatekeepers, who he said need to act responsibly and hold themselves to high standards.

Speaking via videoconference during Securities Regulation Institute’s recent annual conference, he said, “To be blunt, from what I have seen recently, particularly in the initial coin offering (“ICO”) space, they can do better.”

Clayton has instructed the SEC staff to be on high alert for approaches to ICOs that may be contrary to the spirit of our securities laws and the professional obligations of the U.S. securities bar. As an example, he noted, “…there are ICOs where the lawyers involved appear to be, on the one hand, assisting promoters in structuring offerings of products that have many of the key features of a securities offering, but call it an “ICO,” which sounds pretty close to an ‘IPO.’ On the other hand, those lawyers claim the products are not securities, and the promoters proceed without compliance with the securities laws, which deprives investors of the substantive and procedural investor protection requirements of our securities laws.”

He commented these lawyers appear to provide the “it depends” equivocal advice,  rather than counseling their clients that the product they are promoting likely is a security.


During the same speech, Clayton addressed the rules pertaining to security-based swaps still remaining under the Dodd-Frank Act. Clayton said that the SEC is seeking to harmonize its ultimate securities-based swap rules with the CFTC, to increase effectiveness as well as reduce complexity and costs. On this front, Clayton was pleased to report deliberate and constructive engagement with the CFTC is well underway.


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CSS frequently publishes blog posts which are written by our team from their observations in the field, at conferences and through experiences with compliance professionals. These posts are designed to further knowledge and share industry best practices. Topics run the gamut, including Form ADV, cybersecurity, MiFID II, position limit monitoring, technology challenges and more. Complete and submit the brief form below to receive notifications when we publish new content.

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