House Financial Services Committee
Davidson is a member of the House Financial Services Committee of the House of Representatives.
The SEC (Securities and Exchange Commission) and the CFTC, along with the IRS (Inland Revenue Service), have long been embroiled in debates over how best to regulate ICOs.
Should they be classed as securities and regulated as such? Or they better classed as commodities or indeed taxable assets? So far, no agreement has been reached.
Clayton: “Every ICO I’ve seen is a security”
SEC chairman Jay Clayton famously said of ICOs: “Every ICO I’ve seen is a security.”
However, Davidson, during his interview, adopted a more lenient stance.
“We want to make sure that the United States’ capital markets stay strong and vibrant, and one of the ways to do that is provide regulatory certainty,” he said.
Indeed, Davidson acknowledged that ‘there has been fraud in the markets’, adding: “We have to protect consumers.”
He also agreed that some ICOs are simply securities masquerading as tokens.
“Right now there’s a concern that there’s regulatory arbitrage going on, where launching an initial public offering is more complicated and expensive, and essentially companies are doing white papers instead of securities offerings, and they are essentially selling securities,” he said.
Davidson spoke of a ‘disparate patchwork of court rulings that doesn’t provide a coherent whole’.
Davidson: “We want to protect the market”
“We want to protect that market. Blockchain is truly transformative, perhaps in a way the Internet was, in terms of how the distributed ledger can be applied to a broad range of technologies.
“And so that’s why you don’t really know when somebody does an initial coin offering whether they’re really launching this great distributed ledger project that is going to be a security or if it looks a little different, like Ether and bitcoin have been determined to be, essentially commodities.”
Meanwhile, the debate regarding ICOs rages on...