IAC Views on Crypto Assets

We believe that virtually all, if not all, crypto tokens are securities and that they, as well as the platforms and custodians dealing with them, are subject to regulation under the federal securities laws to protect investors. Accordingly, the offering of crypto asset securities and the platforms trading them should comply with the registration, disclosure, anti-fraud provisions and other investor protector provisions of the federal securities laws. We think it is very unfortunate and disturbing that there are legislative proposals to carve crypto assets out of the federal securities laws and undermine investor protection.

The SEC should continue to be aggressive in bringing enforcement actions against companies that are violating the federal securities laws in the crypto space, including, issuers, custodians and those acting as unregistered platforms that offer trading in crypto asset investments. We note that the SEC has a Crypto Assets and Cyber Unit in its Division of Enforcement to investigate securities law violations related to crypto asset offerings, crypto asset exchanges, and crypto asset lending products. In 2022 alone, the SEC brought 30 enforcement actions against crypto-asset market participants. However, the SEC’s Enforcement Division shrank 5% from fiscal year 2016 to fiscal year 2021. This raises questions as to whether the SEC has the resources to keep up with the significant growth and scale of crypto security assets and the rapid pace of change in the crypto markets, along with its other oversight responsibilities in the securities market.

Source: IAC Views on Crypto Assets