The US Securities and Exchange Commission has reportedly lately been seeking information on cryptocurrency-related trading commissions. This comes as the SEC is supposedly examining the cryptocurrency sector more closely.
This news comes from a recent Bloomberg report, which states that several cryptocurrency brokerages have been approached in the last few weeks by the SEC, which is asking about the brokerages’ business practices.
The Bloomberg piece recounts that the SEC is primarily interested in income generated by fees related to trading, financing as well as ICOs. Moreover, the brokerage firms are exclusively relatively minor actors – as no Wall Street bank has yet to begin trading cryptocurrencies.
This could, however, change in the coming weeks and months, as the SEC is mulling whether to approve or refuse a series of cryptocurrency ETFs submitted to the regulator. The SEC has previously delayed its decision on several cryptocurrency ETFs, but it will need to announce some form of a decision on the matter in the coming months.
This latest SEC review might give the regulator more information on cryptocurrencies, in general, as it gears up to decide whether to green-light cryptocurrency ETFs or not.
The Executive Director of Georgetown University’s Center for Financial Markets and Policy stated that ”[t]hey’re trying to understand the whole ecosystem”, in relation to the SEC’s review.
The review is led by the Office of Compliance Inspections and Examinations (OCIE), and Bloomberg reports that it comes following information requests from hedge funds on how these price digital investments.
Clear guidelines from the SEC are needed as more money managers and brokerages request guidance on how to simultaneously deal with cryptocurrencies and comply with the law.
The waters become especially muddied on this topic due to legal questions over which digital assets are to be considered securities and, therefore, fall under the SEC’s jurisdiction.
The Office of Compliance Inspections and Examinations is intended to protect investors and ensure market integrity. Furthermore, the unit reports any signs of misconduct to the SEC’s dedicated enforcement division before any formal investigations can begin.
The Bloomberg piece does not cite any signs of actual wrongdoing, although the OCIE has previously stated that the rapid growth of the cryptocurrency and ICO sector presents ”a number of risk for retail investors”.
In addition to this, the SEC’s chairman – Jay Clayton – has previously called the cryptocurrency sector ”rife with fraud”, and the enforcement arm of the SEC has sued firms whose ICOs have violated securities laws.
Nonetheless, it would seem as if these latest inquiries by the SEC are intended to give the SEC a more complete understanding of cryptocurrency trading commissions and, presumably, the general viability of cryptocurrency trading.
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