Despite helping early stage companies with an excellent method of fundraising, Nasdaq CEO Adena Friedman believes that initial coin offerings (ICOs) are ‘taking advantage’ of retail investors.
Speaking at the Future of Fintech conference in New York on June 20, CNBC reported that Friedman has heavily criticized ICOs, saying that she has a “real concern on lack of transparency, oversight, and accountability that these companies have as they're going out to raise capital through an ICO."
US Securities and Exchange Commission Chairman Jay Clayton reaffirmed his stance last week that most ICOs are securities offerings, and should be held to the same legal standards. Friedman said that she sympathizes with the SEC, that ICOs “are really securities offerings," Friedman said. "I support the SEC on that."
However, Friedman was concerned that regular mom and pop retail investors, like “Aunt Mae from Iowa,” aren’t getting the same level of information and disclosure on investing in ICOs as other traditional investments regulated by securities law. "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," Friedman added.
Nasdaq, the world’s second largest stock exchange with a market capitalization of over $9 trillion, has been experimenting with the cryptocurrency space. Friedman said that Nasdaq “would consider” opening a cryptocurrency exchange in April. Nasdaq also announced a partnership with cryptocurrency exchange Gemini, a company created by early Facebook and Bitcoin investors Cameron and Tyler Winklevoss.
According to Friedman, although cryptocurrency “could become something really interesting ... it could also die on the vine and become the Beanie Baby phenomenon." "The jury's out," she added.