I am often asked, directly, whether I think this coin or that one is a security (and thus required to be registered with the SEC before being offered to the public) or not. Virtually every time I demur.
Source: prestonbyrne.com
It was only a matter a of time. There were clearly signs this was going to happen already out there when the SEC went after defunct “exchange” BitFunder. Today, the SEC made its biggest announcement yet: all the crypto exchanges are illegal unless they register with the SEC.
Why is this important? It turns out the entire $400B cryptocurrency ecosystem is based on trading altcoins or utility tokens.
So in recent months, the SEC has stepped up its enforcement activities, shutting down the most obviously fraudulent ICOs and warning the public that stricter regulations were likely to follow later. Now the feds appear to be getting ready to rein in cryptocurrency exchanges, an important part of the ICO ecosystem that has, until now, operated largely outside of the law.
Online trading platforms have become a popular way investors can buy and sell digital assets, including coins and tokens offered and sold in so-called Initial Coin Offerings (‘ICOs’). The 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.