SEC Chairman Discusses Virtual Currencies with Senate Committee
February 12, 2018
On February 6 before the Senate Committee on Banking, Housing, and Urban Affairs, the Securities and Exchange Commission’s (“SEC”) Jay Clayton spoke on the state of virtual currencies. The SEC chairman testified that despite their infancy, cryptocurrency and Initial Coin Offering markets are growing fast and have become popular in the public eye and among retail investors. He also cautioned that previous instances have occurred where the economy has benefited from popular investments, but investors expose themselves to numerous risks if they do not follow the SEC’s laws. Risks that Clayton listed include false disclosures, volatility, fraud and theft.
Despite the warning, Clayton expressed optimism that advances in financial technology will aid capital formation and provide investment opportunities for both institutional and Main Street investors. Additionally, he advised investors who are thinking about investing in virtual currency should note that such markets reach beyond the U.S. and significant trading could transpire overseas. In other words, an investor’s funds could transfer outside the U.S. without advanced notice.