When the North American Securities Administrators Association released warnings on Bitcoin and other cryptocurrencies, SEC Chairman Jay Clayton commended it, stating, "NASAA's release is a timely and thoughtful reminder to Main Street investors to exercise caution."
Cryptocurrencies, touted as replacements for traditional currencies, "lack many important characteristics of traditional currencies, including sovereign backing and responsibility, and now are being promoted more as investment opportunities than efficient mediums for exchange," Clayton explained.
However, all regulators have been active in regulating this new market, with the SEC leading the way with regulating tokens as securities. In fact, one former CFTC regulator, Jeff Bandman, commended the SEC, saying that its 21A Report of Investigation (issued in July 2017) was a clear analysis of issues tied to DAO (digital) tokens.
"It made clear that the Howey test applied, looking at substance rather than form," Bandman told HuffPost last year, referring to the Supreme Court test for determining whether certain transactions qualify as investment contracts. "I view that report as a 'Digital Marbury vs. Madison.'" He says that report made clear the SEC's jurisdiction in the digital space and "put the market on notice that these tokens can be securities."
