21 Jun Nasdaq CEO: ICOs harmful to retail investors
Yesterday at the Future of Fintech conference in New York, NASDAQ CEO Adena Friedman said ICOs may provide startups with valuable funding but they’re harmful to retail investors.
She argued investors like “Auntie Mae in Iowa” are being taken in by the hype surrounding ICOs.
“To make it no rules at all, when companies can just willy-nilly take people’s money and offer no information at all, with no governance, that sounds to me like you’re taking advantage of people,” she said on CNBC recently.
She’s right about the need for regulations of course, despite the fact that her argument is also patently self-serving and protecting her organization’s near-monopoly role in trading traditional securities.
Recently, top SEC officials have clarified guidelines on whether cryptocurrencies are securities or not. Jay Clayton, Chairman of the SEC stated that bitcoin is not a security and compliance director William Hinman also said Ethereum is also not considered a security given its widespread use as a network and structural component in blockchain applications.
Friedman said the lack of transparency is a huge issue for ICOs as they really submit to the type of more rigorous disclosure and compliance requirements of IPOs.
“I have real concern on lack of transparency, oversight, and accountability that these companies have as they’re going out to raise capital through an ICO,” she added.
Optimistic about blockchain
The NASDAQ CEO recently said “cryptocurrency feels like the “right next step in the space of currency” because a “globalized payment mechanism” is a natural fit for the cross-border digital economy.
Friedman has also recently said NASDAQ would consider developing a digital currency exchange once regulation is established and the market has matured.
Meanwhile, the challenges of compliance, transparency and equal footing for institutional and retail investors remain.