SEC has warned about the dangers of unregulated cryptocurrency exchanges, insisting that all trading platforms that exchange digital assets considered securities must register with the SEC.
According to the SEC Report, some ICOs, digital assets, and cryptocurrencies could be classified as “securities.” This means that trading platforms that exchange them must register with the SEC and comply with necessary regulations.
There has been a concern that there could be fraudulent or illicit trading that different parties could be conducting through the un-registered exchanges trading in these securities. This came even as it was noted that the quality of cryptocurrencies being traded at the exchange wouldn’t matter as long as SEC or any other regulatory agencies do not control which coins are eligible for trading.
The report also goes further to warn that most of the cryptocurrency exchanges may not fully comply with all regulatory measures and may not offer proper support or protection in the event that the exchange gets hacked or users lose funds. It adds that for the cryptocurrency exchanges to provide accurate trading data, they have to be registered and reviewed by SEC.
SEC has also advised traders and investors to check and confirm that the crypto exchange is registered, regulated, reliable and open to all users before employing its services.
The Securities and Exchange Commission has been insisting that cryptocurrency exchanges that trade in Securities must register with them in a bid to protect investors in case of hacks or loss of funds. This is very crucial because there have been cases of hacks that have led to losses counting into millions of dollars but more importantly, scams have been on the rise.