As it continues to probe initial coin offerings (ICOs), the Securities and Exchange Commission (SEC) Wednesday announced that ICOs and cryptocurrency exchanges could be running afoul of the law if they are not registered with the agency.
In a statement, the SEC said:
“These platforms often claim to give investors the ability to quickly buy and sell digital assets. Many of these platforms bring buyers and sellers together in one place and offer investors access to automated systems that display priced orders, execute trades, and provide transaction data.
“A number of these platforms provide a mechanism for trading assets that meet the definition of a ‘security’ under the federal securities laws. If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”
The agency expressed concern that many online trading platforms appear as SEC-registered and regulated marketplaces when, in fact, they are not. A number of platforms refer to themselves as “exchanges,” a term frequently reserved for entities that are regulated or meet the regulatory standards of a national securities exchange, the SEC said. Read more here.