There have been previous posts in this blog about statements by the U.S. SEC saying that most ICO’s would seem to qualify as securities offering and thus must be registered (or qualify for an exemption). In a Statement issued yesterday, the SEC took another tact with implications for the cryptocurrency industry, this time going after exchanges. The SEC said, “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.”
As was the case with its ICO statements, the SEC is concerned about protecting investors. The SEC said these “potentially unlawful” platforms may be giving investors an unearned sense of safety by labelling themselves as “exchanges.” If they are not registered, however, they follow their own rules. For example, investors are not protected from the exchange’s giving priority to larger orders. The Statement included a list of questions investors should ask before they decide to trade digital assets on an online trading platform.