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After months of rumors that US financial regulators might come for cryptocurrencies, the Security and Exchange Commission (SEC) has issued dozens of subpoenas (paywall) and information requests to companies involved in crypto markets.
In a statement today (March 7), the SEC argued that digital assets, like coins and tokens offered and sold in initial coin offerings (ICOs), fall within the definition of a “security” under US security laws.
That could mean platforms that trade digital currencies would have to register with the SEC.
The SEC is the federal agency responsible for protecting investors and keeping order in markets. All of the national securities exchanges, like the New York Stock Exchange, Chicago Stock Exchange, or Cboe Exchange, are registered with the SEC.
The SEC is worried investors in bitcoin and other cryptocurrencies think they’re getting the protections and benefits of a registered exchange, when they’re not.
“Many platforms refer to themselves as ‘exchanges,’ which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange,” said the SEC in a statement on its website. “There is no reason to believe that such information [on digital currency platforms] has the same integrity as that provided by national securities exchanges.”
News of the probes and the SEC statement chilled markets. After today’s announcement, bitcoin prices fell 9%.