In a joint statement, the U.S. Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission (SEC) have vowed to clampdown on the fraudulent activities in the field of virtual currencies and tokens.

SEC Co-Enforcement Directors Stephanie Avakian and Steven Peikin and CFTC Enforcement Director James McDonald said:

“When market participants engage in fraud under the guise of offering digital instruments – whether characterized as virtual currencies, coins, tokens, or the like – the SEC and the CFTC will look beyond form, examine the substance of the activity and prosecute violations of the federal securities and commodities laws.

"The Divisions of Enforcement for the SEC and CFTC will continue to address violations and bring actions to stop and prevent fraud in the offer and sale of digital instruments."

Last year, the SEC published an investigative report stating that "Initial Coin Offerings" or "Token Sales", which involves offers and sales of digital assets by virtual organisations using blockchain or distributed ledger technology (DLT), may be subject to the requirements of the federal securities laws. In December 2017, SEC Chairman Jay Clayton issued a statement on cryptocurrencies and ICOs, underscoring the considerations for main street advisors and market professionals regarding such investments.

The CFTC last month published a proposed interpretation on its authority over retail commodity transactions involving digital currencies, such as bitcoin. In September 2015, the CFTC declared that Bitcoin and other virtual currencies are a commodity covered by the Commodity Exchange Act. In its proposed interpretation, the agency set out its view regarding the “actual delivery” exception that may apply to digital currency transactions.