SEC is closely monitoring businesses with the word blockchain in their name
SEC has become aware of quite a few companies which are adding blockchain to their name in order to reap rich dividends. With the name blockchain being synonymous to cryptocurrencies as well as huge profits, more and more companies are trying to use this to their advantage. Thankfully, SEC has been made aware of the same.
Chairman of SEC, Jay Clayton: Companies should legitimately work
According to the chairman of SEC, Jay Clayton, companies should try to legitimately work in the field rather than just trying to ride with the cryptocurrency boom by adding blockchain to their name.
In the last few years, more than cryptocurrencies, the technology which is underlying that is the blockchain technology has gained more prominence. This is due to the fact that more and more industries are using blockchain technology in order to provide products as well as services to their customers. Also, the usage of blockchain technology is not just limited to a particular industry.
Companies with Blockchain in their names have seen an astronomical rise in the price of their shares
In many of the cases, people are confusing blockchain with cryptocurrency. This is the reason why a few of the companies have added blockchain to their name have actually seen an astronomical rise in the price of their shares.
With that being said, most of the investors do not understand that the blockchain industry or the cryptocurrency industry is filled with risk. Companies are launching more and more ICOs in order to capture this upside. The truth is that not all of these ICO’s are actually beneficial for the investors. This is one of the main reasons why SEC is also trying to discourage investors from investing in ICOs.
South Korea is on the forefront when it comes to alerting the citizens
Other countries are also taking note of the same and are beginning cryptocurrency exchanges as well as ICO’s. South Korea is on the forefront when it comes to alerting the citizens as well as banning cryptocurrency exchanges in order to protect them.
According to Clayton, there are many companies which do not have anything to do with the technology space but are just adding blockchain to their name in order to appear as if they are related to the technology industry. This is nothing but an attempt to mislead the investors who are buying such stocks. This is one of the main reasons why SEC is keeping a keen watch on such companies to protect investors. Sources: zdnet.com
To avoid companies misleading the investors
On part of the SEC, this is a move in the right direction in order to avoid companies misleading the investors. This would certainly help the investors in the longer term.