U.S. SEC Chairman Jay Clayton has underscored the role of legal gatekeepers in the initial coin offering (ICO) and distributed ledger technology space.

In his opening remarks at the Securities Regulation Institute, Clayton outlined the responsibility of lawyers with respect to ICOs, particularly their compliance with the country’s securities laws. He noted that lawyers involved in this space are “assisting promoters in structuring offerings of products that have many of the key features of a securities offering.”

“…those lawyers claim the products are not securities, and the promoters proceed without compliance with the securities laws, which deprives investors of the substantive and procedural investor protection requirements of our securities laws,” Clayton said.

He said that some "lawyers appear to provide the "it depends" equivocal advice, rather than counseling their clients that the product they are promoting likely is a security. Their clients then proceed with the ICO without complying with the securities laws because those clients are willing to take the risk.”

In addition, Clayton noted the recent move by a number of companies to jump on the blockchain bandwagon, including rebranding efforts on these lines, which has led to a surge in their stock prices. In the past couple of months, a biotech company Bioptix, beverage company Long Island Iced Tea, have rebranded as Riot Blockchain and Long Blockchain Corp. respectively, which saw a huge jump in their stock price.

In addition, photo giant Kodak also revealed its blockchain and cryptocurrency plans recently which caused nearly 150 percent surge in its stock price.

“I doubt anyone in this audience thinks it would be acceptable for a public company with no meaningful track record in pursuing the commercialization of distributed ledger or blockchain technology to (1) start to dabble in blockchain activities, (2) change its name to something like "Blockchain-R-Us," and (3) immediately offer securities, without providing adequate disclosure to Main Street investors about those changes and the risks involved,” he said.

He further said that the SEC is looking closely at the disclosures of such companies and whether the disclosures comply with the securities laws, particularly in the case of an offering.