Five years ago, regulators didn’t pay much attention to crypto-currencies, but today they have become one of the main targets of regulation. Whether it’s in countries like China, or the United States, which is currently the world’s largest market for crypto-currency trading, but also for mining.
According to the most recent data, Coinbase will be investigated in the United States. This investigation is aimed at determining whether the crypto-currency exchange platform has allowed users to illegally trade digital assets.
The problem is that it appears that some of the digital assets that users traded should have been classified as securities, but Coinbase treated them as an ordinary digital asset. That’s why the U.S. is going to start a thorough review, at least that’s what three anonymous sources who are very familiar with the situation have said.
This is actually not the first time that the SEC, or the U.S. Securities and Exchange Commission, has started to keep a close eye on crypto-currencies. Since the growth of the market has become an issue for this entity, it has started to scrutinize them.
Is the SEC against crypto-currencies?
As the market grew, regulators began to look at crypto-currencies with some suspicion, but with the downturn it has experienced in recent months, scrutiny has increased like never before. While some crypto-currencies have peaked, wiping hundreds of billions of dollars off the market, regulators view crypto-currencies as an imminent danger to users.
As SEC Chairman Gary Gensler stated, it is of utmost importance that crypto-currency trading platforms be scrutinized more closely. According to the chairman, these platforms should have higher security standards to better protect small investors, as they are the ones who use these platforms and suffer the most losses.
An important point to consider is that Coinbase is the largest crypto-currency exchange platform operating in the United States. It gives US users the opportunity to trade over 150 tokens. The problem is that these tokens have long been considered digital assets, which is why there hasn’t been more SEC oversight, but it seems that has changed.
The SEC’s next review will be to determine which of the 150+ tokens that can be traded on Coinbase can be considered securities. If there are tokens there that can be understood as securities, Coinbase could face some problems, besides having to register with the SEC.
It’s also important to note that in the past, Coinbase has discussed how the agency might oversee the crypto industry. In fact, over the past week, Coinbase has asked the SEC to make proposals for clearer rules, and in the meantime, Coinbase has made the decision to increase the tokens it has available for trading, which has alerted the SEC.
What will happen to Coinbase?
At this point, it’s unclear what will happen to Coinbase, but what we do know is that tension between the exchange and the SEC has increased recently. On July 21, the SEC charged a former Coinbase employee with allegedly violating insider trading rules and leaking certain information.
He allegedly advised his brother and a friend to invest in a crypto-currency before joining Coinbase’s new tokens, so that when the platform included them, they would make a profit.
In addition, the SEC has apparently determined that nine of Coinbase’s proposed tokens are considered securities. In response, Coibase’s CEO said that the company is scrutinizing each of the tokens they include. This means that they can determine whether or not it is a security.
It is likely that we will soon see discussions about which tokens are security and which are not. In the event that the SEC determines that one of Coinbase’s tokens is classified as having value, the situation will become a bit more difficult for the exchange, as it will face some restrictions.