SEC Wants Tighter Crypto Regulations

Coinmama: Buy Bitcoin with Credit Card

The SEC just made it clear that it wants to regulate Bitcoin and other cryptocurrencies. And this expected development resulted in the crypto rollercoaster taking a sharp down turn.

The Securities and Exchange Commission issued a warning against unlicensed crypto exchanges on Wednesday, confirming that any exchange that lets investors buy and sell securities needs to comply with the existing rules it has in place.

No matter what the securities may be, whether government bonds or ICOs.

All this is not surprising, of course.

The SEC has been zeroing in on these digital currencies since the start of the year. But while it first scrutinized companies and initial coin offerings, the agency is now warning consumers against trusting these unregulated exchanges.

This is what they stated in a post:

“Many platforms refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange. Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the SEC does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.”

Clever use of words.

The agency is basically arguing that digital assets like coins and tokens that are offered and sold in initial coin offerings fall under the definition of security under US laws.

Obviously, as long as consumers continue to use unregistered exchanges, all SEC can do is offer advice on how people can protect themselves. Which is sage guidance for investors new to the game who think that they are getting the protection and benefits of a registered exchange when they are actually not.

Now, whether a crackdown is coming against these unregulated exchanges remains to be seen.

But it is clear that SEC wants these cryptocurrency exchanges to follow the same rules as every other exchange. That means registering with the body, as a national securities exchange, an alternative trading system, or as a broker dealer.

In the meantime, the SEC has put together a list of questions to crypto currency investors to help them pick an exchange, which you can view at the link above.