The Securities and Exchange Commission of the US announced today that it intends to require online cryptocurrency trading platforms to register with it, as exchanges.
In unrelated news, this just happened:
Source: coinmarketcap.com
The SEC said in its statement: "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 drop in price can likely be attributed to several recent developments in the US that suggest that a more federal framework of regulation is in the making.
Firstly, the IRS ordered Coinbase, a major exchange, to submit to it the records of thousands of high-earning customers so that they can be taxed.
Taxation of cryptocurrency is not a given, as in most places the assets still lack a clear legal definition, but authorities are catching up. This can't be seen as surprising; cryptocurrency was not taxed initially because it was a small-scale, niche industry, but the value of the market has now reached the billions and the technology is being adopted by the general public and financial institutions alike. Death and taxes, as it were.
Needless to say, having to pay tax on Bitcoin takes away some of the appeal of having it.
Secondly, the SEC is reported to have been sending subpoenas out to tens of cryptocurrency-related firms in order to gather information about them. Again, this was expected. Jay Clayton, head of the SEC, has long made it clear that he is not impressed by cryptocurrency-related ventures operating outside the law. He said at a recent senate hearing that he is aware that many ICOs are operating illegally: “Their promoters and other participants are not following our security laws. Some people say that’s because the law isn’t clear. I do not buy that for a moment.”
The SEC created a cyber unit in September specifically to target violations involving Blockchain technology and ICOs, and it has not been inactive - the latest move was an ordered halt to the ICO of AriseBank of Dallas. It said in a statement at the time that the project "used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600 million of its $1 billion goal in just two months." This was the third such action taken by the unit.
Thirdly, a US federal judge ruled yesterday that Cryptocurrencies can be legally classified as commodities. This ruling was made as part of a specific case against an individual giving fraudulent investment advice, but the precedent created will be significant.
