We live in interesting times -- back to back reports of two separate regulatory schemes applied to the same asset. But before anyone presses the panic button, this possibility was expected and should not dash the reality that cryptocurrencies offer a tremendous alternative to fiat currencies in every market.
The Securities and Exchange Commission has weighed in on cryptocurrency “exchanges.” In its Public Statement dated March 7, 2018, the SEC stated that if a trading platform offers digital assets and operates as an exchange, then the platform must register with the SEC as a national securities exchange or be exempt from registration.
One day prior, a federal judge in New York ruled that the Commodity Future Trading Commission can regulate cryptocurrencies.
So now what? Do we care? It certainly appears that the crypto market cares as popular cryptocurrencies such as Bitcoin, Ethereum and Ripple plunged as much as 10% within an hour of the SEC Statement and continue to drop over 24 hours later.
But do we really care and what does it mean for us as investors or those of us seeking alternatives to fiat currency? Are our favorite exchanges able to register or prove they are exempt from registration? The short answer is yes – the successful exchanges can and will register and come into compliance – just as Coinbase and some others were ultimately able to comply with New York’s Bitlicense.
But why now? The SEC Chairman Jay Clayton has stated that SEC staff has concerns that certain crypto exchanges appear to investors as regulated when in fact they are not.
Hold on a second Mr. Clayton! There was never a loud cry for exchanges to be regulated (ahem – the Mt. Gox debacle excluded). The SEC understands that in fact many crypto investors do not want regulation. That is part of the appeal – keep the government out of our business. But of course, the government is very very interested in our business – especially when it comes to finding money to keep operating and pay themselves.
It appears that the SEC and other regulatory bodies are seeking to regulate the marketplace under the guise of protecting us from ourselves. After all, the SEC’s Public Statement suggests that regulating exchanges and requiring registration benefits unwary investors. Sadly, it appears that the mission creep of regulators will continue.
Remember though – we knew this was coming. The real value in cryptocurrencies remains. These assets will continue to allow us to trade for goods in the marketplace, avoid monetary inflation, decentralize currency, lower transaction fees and on and on.
So keep you chin up. These exchanges are run by a savvy group. All remains good in the crypto universe.
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