If the SEC has the authority to regulate crypto exchanges, it should have done so long before now. The SEC could have simply prohibited U.S. customer assets from being held by unregulated crypto exchanges. Instead, as we have written in these pages, the SEC’s only action made the problem worse by blocking banks and brokers from taking custody of crypto assets.
Similarly, the SEC has asked crypto exchanges to register with regulators, but it has provided no guidance making it possible to do so. Once the SEC does provide that guidance, it should require crypto exchanges to register or shut them down. Instead, the SEC has taken enforcement actions against alleged unregistered public offerings of crypto tokens for lack of disclosure, while largely ignoring the risky activities of crypto exchanges with millions of retail customers. Worse, as reflected in this month’s regulatory agenda, the SEC still has no plan to regulate crypto exchanges. Congress needs to investigate the SEC’s regulatory failings.
‘Enforcement 40’ for 2020
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