SEC Provides Guidance For Employee Investment In Cryptocurrencies, ICOs


The US SEC’s Office of the Ethics Counsel recently issued a memo regarding staff investment in cryptocurrencies and initial coin offerings.

In January 2018, the US Securities and Exchange Commission’s Office of the Ethics Counsel provided guidance to employees regarding virtual currency and digital asset trading, according to Bloomberg.

Apparently, SEC employees are permitted to invest in cryptocurrencies but must pre-clear their trades. This procedure parallels the agency’s approach to stock trading by the agency’s staff.

The memo reportedly states that commission staff must abide by a seven-day waiting period before investing in initial coin offerings (ICOs). It’s unclear whether this weeklong prohibition begins at the outset of an ICO, or whether staff may only trade on secondary markets seven days after the crowdfunding event ends.

In recent months, the SEC has actively policed cryptocurrency-related fraud, pursuing cases against AriseBank, BitFunder, and GAW Miners, among others. The agency has also been attentive to the initial coin offering craze – and acted to curtail ICOs that clearly fall under the scope of securities law (e.g., Munchee).

Earlier this month, SEC chairman Jay Clayton testified before the US Senate Banking Committee, alongside CFTC chairman J. Christopher Giancarlo, on the topic of cryptocurrencies and ICOs. Clayton had published his personal views on the matter in December 2017, after previously expressing concern about potential pump-and-dumps in the cryptocurrency markets.

A spokesperson for the SEC declined to comment on the memo.

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