Over the last several months, the SEC has intensified its threats to so-called "gatekeepers," especially in the area of initial coin offerings ("ICOs") and cryptocurrencies. In testimony on Tuesday, February 6, 2018 before the Senate Committee on Banking, Housing, and Urban Affairs, SEC Chairman Jay Clayton reminded gatekeepers—including lawyers—that the SEC is laserfocused on them when they advise clients on ICOs. Clayton’s testimony was his latest in a series of warnings to lawyers involved in structuring ICOs that the SEC is on "high alert" and may charge them with securities law violations if they do not "do better" in performing their job as gatekeepers for the securities industry.

While the SEC has long sought to hold accountable lawyers whom it believes have fallen short of their professional obligations, Clayton’s recent warnings go far beyond those of his predecessors. While many entrepreneurs—and their lawyers—may view ICOs as a decentralized and largely unregulated means of raising capital, the SEC has essentially adopted a rebuttable presumption that ICO tokens are securities that must comply with the registration requirements of the securities laws. In his recent remarks, Clayton admonished lawyers that they will be held accountable not only for deliberately advising their clients on how to use ICOs to avoid securities registration requirements (which is not surprising), but—more importantly—for providing perfunctory and potentially negligent " 'it depends' equivocal advice" about whether an ICO is a securities offering.

Click here to read the full article published by Bloomberg Law.