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SEC & CFTC Heads Testify Before the Senate Banking Committee

Differing views on ICO regulation

14 December 2018

Clifford Chance New York Partner, David Felsenthal and Associate Jesse Overall have written an article for CrowdfundInsider.com on the recent US Senate Banking Committee hearing involving testimony by the Securities and Exchange Commission (SEC) Chairman Jay Clayton and Commodity Futures Trading Commission (CFTC) Chairman J. Christopher Giancarlo

Truly, it was a tale of two cities.

On February 6, 2018, the U.S. Senate Banking Committee held a hearing on the oversight role of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) in respect of virtual currencies like Bitcoin and Initial Coin Offerings (ICOs). The SEC views ICOs as being similar in nature to the securities it traditionally polices, while the CFTC sees markets for virtual currencies like Bitcoin as commodities subject to certain forms of its jurisdiction.

Although the basic categorization scheme is clear (ICO = SEC; virtual currency = CFTC), detailed practical criteria for distinguishing between what products fall into which category was not discussed in the hearing. The general rule for differentiating a commodity from a security is that substance prevails over form in the analysis, and so, according to Chairman Clayton "simply calling something a ‟currencyˮ or a currency-based product does not mean that it is not a security." ...

You can read the full article at: CrowdfundInsider.com