SEC Mandates Exchanges Must Register If Dealing In Securities

Investing, News, Regulation | March 7, 2018 By:

The US Securities and Exchange Commission today continued its drive to bring the cryptocurrency world under its regulatory control, mandating that exchanges register with the agency.

A post on SEC.gov  laid out the new ground rules. “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 federal regulatory framework governing registered national securities exchanges and exempt markets is designed to protect investors and prevent against fraudulent and manipulative trading practices.”

The agency urged investors to use only SEC-approved exchanges, trading systems, or broker-dealers for trading digital assets defined as securities.

“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are 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.  Although some of these platforms claim to use strict standards to pick only high-quality digital assets to trade, the SEC does not review these standards or the digital assets that the platforms select, and the so-called standards should not be equated to the listing standards of national securities exchanges.”

The market reacted negatively to the SEC news, down about 10 percent across the board.