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The SEC Reiterates Concerns Regarding Crypto Regulation and Mainstream Trading

The United States Securities and Exchange Commission (SEC), the body tasked with formulating and enforcing regulatory procedures for the securities and stocks industry, has reiterated prior concerns it held regarding crypto regulation.
 
Last year the agency highlighted its feelings toward perceived manipulation in the cryptocurrency industry when it rejected several applications for a Bitcoin exchange-traded fund (ETF). Such a product would make Bitcoin available for trade to institutional investors and flood a potentially large sum of capital into the industry. However, the SEC worries that such an event could negatively affect the global financial economy if not properly regulated.
 

Continued efforts to fight illegal token sales

Recently, the agency sued a crypto project called ICOBox for allegedly conducting an illegal token sale during 2017. The sale, known as an initial coin offering (ICO), raised over $14.6 million by selling tokens that had not been registered as securities with the SEC. In addition, ICOBox was not registered as a broker despite offering brokerage services to other projects conducting ICOs.
 
Michele Wein Layne, regional director of the SEC’s LA office, criticized the company for selling tokens that are now “virtually worthless, without providing information that is critical to making informed investment decisions.”
 

The ongoing threat of manipulation

Speaking to CNBC at the Delivering Alpha conference, SEC Chairman Jay Clayton said Bitcoin must be better regulated before they will consider approving products that will make it available via major exchanges. He noted that the agencies main concerns are the ongoing threat of manipulation and the severe lack of strict and concise practices when it comes to price discovery in the crypto market.
 
“We have to get to a place where we can be confident that trading is better regulated,” he said.
 
Another sticking point which keeps the agency from approving a Bitcoin ETF is the need for high-quality, secure crypto custody. Third-party custody is often required in the holding of financial assets to protect against loss or theft. Recently, a Bitcoin ETF put forward by investment management firm VanEck and tech startup SolidX was withdrawn by the duo after being delayed multiple times. It is likely the companies will revise their application and resubmit an updated version in the coming months.
 
The price of Bitcoin (BTC) and the overall cryptocurrency market has recently suffered further losses, adding to a month of decreasing value. Bitcoin at $9,860 and Ethereum (ETH) at $208.38 are both down by around 3% today, with XRP and Binance Coin (BNB) two of the worst-hit coins, down by more than 8% each, trading at $0.29 and $20.94 respectively.

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