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The Benefit of an ICO Bubble Burst

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Feb 12, 2018

On February 12, 2018, the D&O Diary released a guest post by John Reed Stark, President of John Reed Stark Consulting and former Chief of the SEC’s Office of Internet Enforcement, where he discusses how the recent dramatic decline in cryptocurrency prices certainly at least raises the question of whether or not the pricing bubble for cryptocurrencies that fueled the recent wave of initial coin offerings (ICOs) has burst – or at least, is about to burst.

SEC Chairman Jay Clayton stated: I believe every ICO I have ever seen is a security. ICOs should be regulated like securities offerings. End of Story.”

Mr. Stark adds that in the coming year or two, the SEC, the U.S. Financial Crimes Enforcement Network (FinCEN), the U.S. Department of Justice (DOJ), the Commodity Futures Trading Commission (CFTC) and a slew of other federal and state agencies will initiate a continuing sweep of ICO-related enforcement actions, triggering a virtual earthquake in the ICO industry.

But an ICO bubble burst will inevitably ensure that whatever cryptocurrency marketplace survives will provide the same customer protections and capital safeguards often taken for granted in the context of the traditional trading of securities. This not only makes for good business, but for a more robust and resilient global financial marketplace as well.

Review the guest post on the D&O Diary's website.

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