The Securities and Exchange Commission (SEC) has released a public statement regarding crypto asset trading and the companies that issue such assets.
Blockchain Has Ups and Downs
In the statement, the SEC explains that while they acknowledge the benefits of technological advancements like blockchain, they’ve had specific impacts on the trading market that ultimately require companies dealing in the technology to adhere to certain rules. The notice reads:
The Commission’s Divisions of Corporation Finance, Investment Management, and Trading and Markets (the “Divisions”) encourages technological innovations that benefit investors and our capital markets, and we have been consulting with market participants regarding issues presented by new technologies. We wish to emphasize, however, that market participants must still adhere to our well-established and well-functioning federal securities law framework when dealing with technological innovations, regardless of whether the securities are issued in certificated form or using new technologies such as blockchain.
Where Do These Issues Come From?
The notice then proceeds to explain that most of the issues affecting the trading market in a not-so-positive way stem from three specific projects. The first is initial coin offerings, or ICOs. The second is companies or investment projects that center around cryptocurrencies or that try to get others to invest in them, and third is the “secondary market trading of digital assets.”
The notice then discusses some of the legal action it has taken against companies that have not adhered to the body’s registration processes or that have attempted to offer trading behind “closed doors” without proper supervision. Some of these companies include EtherDelta, AirFox, Paragon, TokenLot LLC and Crypto Asset Management.
This Is Good, People!
The SEC assures that the registration processes it has in place are designed to keep customers safe and their privacy intact. The idea is to protect customers and their money from those who do not play by the rules or who engage in illicit activity.
While it’s easy to jump into negativity and assume the SEC isn’t being open-minded, it can also be said that the organization recognizes the growing crypto market as a valid trading enterprise. Therefore, it is aiming to protect and oversee the arena as they would with stocks or bonds. More rules often mean that the market is expanding and becoming mainstream, and with more participants at the helm, the SEC wants to ensure these participants are shielded from the problems that often come with investing.
In many ways, rules and regulations signify a positive change in the market; that more people are trading, and thus require appropriate protections.
Do you agree with the SEC’s legislation regarding the crypto market? Post your comments below.
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