Reed Smith Client Alerts

On October 12, 2017, the U.S. Securities and Exchange Committee (“SEC”) held an Investor Advisory Committee (“IAC”) meeting to consider, among other things, blockchain technology and the implications for securities markets.1 The meeting covered a broad range of topics relating to blockchain and distributed ledger technology (“DLT”), including initial coin offerings (“ICO”), post-trade processing, and decentralized applications. In the wake of the SEC’s recent enforcement action alleging that two recent ICOs were fraudulent,2  the SEC is cautiously and carefully approaching these topics in order to better capture the benefits of this new technology while avoiding the potential for fraud and abuse.

Opening Remarks

In his opening remarks, Chairman Clayton emphasized the need for the SEC to remain “vigilant about this technology” to ensure that it is not used for “pump-and-dump and other fraud.” Commissioner Stein echoed the Chairman’s concerns and explained that while technology “has the potential to revolutionize capital raising . . . the risk of fraud signals a need for clear oversight.”