#Regulating Cryptoassets: SEC Investor Advisory Committee Urges Law Enforcement

On April 11th, the US Securities and Exchange Commission (SEC) Investor Advisory Committee (IAC) submitted its opinion on the regulation of cryptoassets to the SEC on Thursday. The committee believes that almost all cryptotokens are securities, and urges the SEC to prioritize law enforcement related to cryptoassets. It is reported that the establishment of this committee aims to provide recommendations to securities regulatory authorities on regulatory priorities.

The US SEC Advisory Committee urges the SEC to continue strengthening its encryption enforcement actions, stating that almost all tokens are securities

The US Securities and Exchange Commission (SEC) Investor Advisory Committee (IAC) submitted its opinion on the regulation of cryptoassets on April 11th, 2019. The committee strongly believes that almost all crypto tokens should be categorized as securities, and therefore subject to SEC regulations. The IAC also recommends that the SEC place a high priority on law enforcement related to cryptoassets.
##Overview of the SEC Investor Advisory Committee
The SEC Investor Advisory Committee was established in 2010 to advise the SEC on regulation and oversight priorities. The committee is composed of individuals with various backgrounds, including expertise in financial services, corporate governance, investment management, securities law, and investor protection. The SEC IAC frequently provides recommendations to regulatory authorities on regulatory priorities, investor protection, and changes in the industry.
##The SEC IAC’s Opinion on Cryptoassets
The SEC IAC submitted its opinion on the regulation of cryptoassets to the SEC in April 2019. The committee’s opinion is that the vast majority of crypto tokens should be classified as securities under SEC regulations. The IAC further suggests that the SEC should prioritize enforcing laws related to cryptoassets, particularly those related to fraudulent ICOs and scams. The committee also noted that the rapid growth of cryptocurrency has resulted in many models that are not adequately qualified by existing securities laws.
##Why Secure Classification is Important
The SEC defines securities broadly and aims to protect investors by regulating investments. A security is an investment in a common enterprise with the expectation of profits, primarily from the effort of others. If almost all crypto tokens fall under this definition, then they will fall under the jurisdiction of the SEC, and issuers must follow SEC regulations. Such regulations include reporting requirements, and the disclosure of relevant information to the SEC and investors.
##Regulating Cryptoassets: The Future
The SEC IAC’s opinion is particularly timely, as cryptocurrency has witnessed significant growth in recent times. Notably, the Bitcoin bubble in 2017 resulted in a high demand for Initial Coin Offerings (ICOs) that had little regulatory oversight. Regulators such as the SEC, have since cracked down on crypto scams and fraudulent ICOs, culminating in the enforcement of various laws related to cryptoassets.
With the SEC IAC’s recent opinion and existing SEC rules, the crypto industry finds itself pushed towards a more regulated future. The SEC is unlikely to take a lax stance on crypto regulation despite efforts by proponents of decentralized, unregulated systems. Even with consistent calls for regulation, the crypto industry faces unique challenges in that technology updates happen fast and regulation can struggle to keep up. As such, both industry players and regulatory bodies must continue to work diligently to arrive at a system, which best serves all stakeholders involved.
##FAQs
Q: Why does the SEC want to regulate cryptoassets?
A: The SEC is concerned about the lack of transparency and investor protection in the crypto industry. Regulating cryptoassets enables the SEC to protect investors from fraud and ensures the industry operates in a way that supports investor and market confidence.
Q: Will all cryptoassets be regulated as securities?
A: While the SEC IAC recommended that almost all crypto tokens be classified as securities, it will depend on the SEC’s evaluation of each asset. Some crypto assets may not meet the definition of securities.
Q: What is an ICO?
A: An Initial Coin Offering (ICO) is a crowdfunding technique used by blockchain and crypto startups to raise funds for their projects. It involves the issuance and sale of a new cryptocurrency token. Some ICOs were fraudulent and scammed investors, leading to the SEC’s increased regulation of the crypto industry.
###Keywords
Cryptoassets, Regulation, SEC, Investor Advisory Committee, Law Enforcement, Securities.