SEC Criticizes Cryptocurrency Exchanges While Banks and Foreign Officials Come Together To Eliminate Crypto Fraud

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The Security and Exchange Commission (SEC), a U.S. government agency responsible for overseeing securities transactions and activities within the United States, has recently stated that nearly all cryptocurrency exchanges today are unregulated and therefore investors should use caution when depositing their money or coins with any one of them.

The SEC went on to say that all cryptocurrency platforms engaged in trading digital currencies online should definitely be registered under the supervision of a regulatory body. Meanwhile, many foreign regulators along with U.S. banks have already begun to work together to stop fraud associated with nefarious activities caused by the lack of regulation among cryptocurrency exchanges.
SEC says cryptocurrency exchanges are an unregulated mess

SEC’s Views

As far as the SEC is concerned, any tokens that have been offered will be offered, or are currently being offered through an Initial Coin Offering (ICO) are considered by them as securities and thus should be registered through them, a broker/dealer, or another alternative trading regulatory agency.

The main concern among the agency is that most digital coin investors assume that online platforms that currently call themselves “exchanges” are regulated in some way and offer the investor some protection against fraud and theft. The reality, however, is quite the opposite.

Cryptocurrency exchanges are both unregulated and uninsured and offer no safety nets for investors trading or depositing cash or coins on or through their platforms.

Crackdown On The Horizon

In a continuing effort to increase regulations among cryptocurrency exchanges, the SEC is likely to impose some rules among them in the near future, that is once they have decided on how best to do that.

The fact still remains that the SEC is a U.S. government agency that operates within national jurisdiction and since many U.S. cryptocurrency traders use foreign exchanges to trade digital coins, it is not quite clear how it will be able to regulate and register those exchanges and protect its citizens from “crypto fraud”.

U.S. Bank Regulators & Foreign Financial Regulators To the Rescue

While the SEC is deciding how to best clean up the current “cryptocurrency mess”, bank regulators within the U.S. have begun to unite with a number of foreign regulators to help decrease fraud within the global cryptocurrency market.
This effort has been taken up as the SEC cannot enforce any rules among foreign exchanges at the moment and the current cryptocurrency regulatory body, the Commodity Futures Trading Commission (CFTC), can only regulate digital currency futures and not buy/sell transactions, where most of the fraudulent activity appears.

Yet U.S. Banks and foreign financial regulators are not trying to come up with a set of regulatory rules on their own as they are still looking to the SEC and CFTC to help them tackle many of the major issues of regulating a worldwide cryptocurrency market.

It is expected that these two U.S. regulatory agencies will ultimately come to a conclusion on how to monitor, register, and regulate digital currency markets worldwide along with the help of other foreign regulators.

The difficulty right now is coming up with regulatory principles and rules that stop fraud and protect U.S. citizens along with foreign cryptocurrency investors at the same time. It seems like the financial regulatory agencies worldwide are going to have to join hands on this one to figure it out.

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