SEC Chairman Suggests Changes to Securities Rules that Favor STOs

Jay Clayton, Securities and Exchange Commission (SEC) Chairman since January 2017, made a recent statement which featured positive reception throughout the larger security token community. Clayton advised that the SEC is strongly open to new ways in which smaller firms can acquire capital and consequently cultivate a successful business.

Increased Access to Capital

Clayton’s message, which focused on capital formation, was delivered at the Nashville 36|86 Entrepreneurship Festival in late August, 2018. The theme was clear: “The SEC should be keenly focused on helping small businesses from coast to coast access capital to grow, create new jobs, and, in turn, provide investors, including our Main Street investors, expanded investment opportunities.”

The Digital Assets Market

His further comments strongly indicated support for the forthcoming digital assets market. It is clear to see that security tokens could become at least one way in which such a vision can be actualized.

As Clayton said, [su_quote]No conversation about recent efforts at the SEC to foster innovation would be complete without mentioning our approach to distributed ledger technology, digital assets, and ICOs. Our efforts in these areas embody two key principles the SEC has followed for many decades— embrace new technologies that cut costs and provide new investment opportunities while continuing to require that our retail investors have access to the material information necessary to make an investment decision, including the key risks involved, as well as other fundamental protections. [/su_quote]

All-in-all, Clayton emphasized that the SEC is more than willing to help businesses— especially small businesses— who seek to raise capital. However, they simply must follow the law. There is no surprise here, as Clayton is known to emphasize the successful history of the SEC’s implementation of legislation when questioned about the future regulation of distributed ledger technology.

The Benefits of IPO Compliance

Ultimately, in terms of the general IPO market and its regulations— which are popularly characterized as stringent— Clayton’s remarks reflected an undoubtedly positive outlook for both investors and businesses.

[su_quote cite=”Jay Clayton”]Addressing this trend— a problem for which, unfortunately, no single policy initiative exists— will, I believe, yield significant benefits for our retail investors as well as emerging companies themselves. For example, investors in these types of companies will have access to investment opportunities in more companies and will benefit from stronger and more complete disclosure than they would likely receive if companies continued to eschew the public markets as a matter of course. This is particularly the case for Main Street investors who generally do not have the opportunity to invest directly in high-quality private companies[/su_quote]

What do you think are the biggest obstacles in terms of security token regulation by the SEC? What steps need to be taken in order to provide an adequate solution? We’d love to see what you have to say below!

Image courtesy of Fintech World.