Regulation

SEC Head Concerned About “Substantial” Cybercrime And The Rise Of ICOs

U.S. Securities and Exchange Commission Chairman Jay Clayton said on Tuesday he is concerned that investors of all sizes don’t understand the full scale and scope of risks posed by cybercriminals and cybercrime.

“I am not comfortable that the American investing public understands the substantial risks that we face systemically from cyber issues,” he said during a panel discussion at New York University. “I’d like to see better disclosure around that.”

Clayton has already said that cybersecurity will be a priority of his tenure as head of the SEC.

Among areas of concern for regulators are hackers that lift information with the intention of using it for market advantage, according to Stephanie Avakian, co-director of the SEC’s enforcement division. Avakian also noted that the SEC’s focus is on pushing firms toward better safeguarding of sensitive information and on the “growing prevalence of initial coin offerings (ICOs).”

An ICO is where a digital currency based on blockchain technology is sold publicly and the currency is often traded on secondary exchanges.

The SEC said in July that tokens issued through ICO can be considered securities, meaning they would fall under laws that require disclosures and are subject to regulatory scrutiny to protect investors, unless a “valid exemption” applies.

“As with any kind of newsworthy event, roaches kind of crawl out of the woodwork and try to scam money off of investors,” SEC co-Director Steven Peikin said of the rapidly growingly popularity of ICOs.

Clayton did affirm there has not be any sort of shift in priorities for the SEC and that the goal remains to keep retail investors protected.

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