What the US SEC’s Actions Mean for Exchanges

What the US SEC’s Actions Mean for Exchanges

The SEC recently released a stream of rulings versus ICOs such as AirFox and Paragon, but, the regulatory body’s actions on exchanges have a more substantial, short-term effect which could drive new investments to the asset class

On 19 November, news of the settlements between the SEC and ICOs CarrierEQ (AirFox) and Paragon circulated. In a public statement released by the SEC, the said ICOs are culpable for failing to register their token issues as securities, rather than fraudulent activities.

According to CoinDesk’s Institutional Crypto newsletter, SEC actions like this are not only about ICOs but also about, and to a greater extent, exchanges.

SEC Statement and Settlement with the exchange EtherDelta

On 9 November came the SEC’s first enforcement effort against an exchange. The agency implicated EtherDelta for infringing securities laws by neglecting to register the exchange. A settlement where EtherDelta founder Zachary Coburn agreed to pay fines, interests, and penalties was reached.

With the statement regarding this case, the SEC defined what is deemed an exchange and what conditions call for an exchange to register.

Last month, the Office of the Attorney General (OAG) in New York released the results of its fact-finding investigation on cryptocurrency exchanges. The result suggested that crypto-trading platforms pose an added risk to investors by functioning as the venue for trading and, at the same time, acts as a broker-dealer.

The newsletter quoted from the OAG result which states that exchanges have not registered with the SEC:

Virtual asset trading platforms now in operation have not registered under state or federal securities or commodities law

And this statement, according to the newsletter, indicated what was to come to exchanges.

Both governmental agencies, the SEC and OAG, are set to protect investors.

Advancement of Digital Assets

In closing, the newsletter states that the process of registering exchanges will disrupt current business models. The added paperwork and compliance requirements will also add costs for trading platforms.

But more robust infrastructure may result from this oversight that can go hand-in-hand with governmental regulators. This may bring clarity and new investments to the asset class.

SEC Actions in the Crypto Industry

The SEC suspended SIMEX Inc. from making false claims, suspended two investment products offered by a CoinShares subsidiary, and it is still awaiting the right BTC ETF proposal.

BTC

3,960 USD
0.61%

ETH

147.66 USD
1.26%

Related news

A DIY Bitcoin Lightning Node Project Just Hit Its 1.0 Milestone

A project aiming to empower people to build nodes that can send and route payments on bitcoin’s in-development lightning network has officially released version 1.0 of its code. Announced this week, RaspiBlitz has published finalized instructions for building a lightning node on a tiny hobbyist computer called a raspberry pi. Often used for custom tech […]
CoinDesk

[Guest Post] Florida Appellate Decision Expands Scope of Money Transmission Laws When Using Bitcoin

by Matthew Kohen and Justin Wales A recent Florida Third District Court of Appeal opinion may affect how individuals and businesses utilize bitcoin and other virtual currencies in the state of Florida. In Florida v. Espinoza, Case No. 3D16-1860, the State’s intermediary appellate court ruled that th... The post [Guest Post] Florida Appellate Decision Expands Scope of Money Transmission Laws When Using Bitcoin appeared first on CoinReport.
CoinReport

Hot news

By continuing to browse, you agree to the use of cookies. Read Privacy Policy to know more or withdraw your consent.