SEC Chairman: ICO transactions are vulnerable to price manipulation, the Commission will continue to develop regulatory plans

The U.S. Securities and Exchange Commission (SEC) has once again expressed its views on initial coin offerings (ICOs).

Today, SEC Chairman Jay Clayton spoke at the New York Institute of Legal Practice's Securities Regulation Institute, where he said the ICO market is opaque and vulnerable to control.

He told attendees:

“What investors often don’t understand is that ICO leaders and managers have access to instant liquidity and, as larger investors, often purchase tokens at discounted prices. Trading of tokens on these platforms is susceptible to price manipulation and other fraudulent trading practices.”

Clayton cited the SEC’s findings on the collapse of the DAO, and he also reiterated that as cryptocurrency exchanges, they must either be registered or exempt.

He added: “The SEC will continue to seek to provide clear guidance to investors on how tokens are listed on exchanges, the criteria for listing tokens, how tokens are valued, and what protections will be put in place for market integrity and investors.”

While Clayton acknowledged that regulation is needed regarding ICOs, in his view, “over time, penny stocks and ICOs have proven to be fertile ground for defrauding investors.”

He concluded:

"These are areas where the SEC may not yet have policy or regulatory answers, but we are constantly looking for adversarial approaches that are opaque and help create an environment for unruly behavior."