The US Securities and Exchange Commission Cannot Be Trusted to Oversee Crypto Trading
When applied to the dynamic crypto market, the SEC’s standard method of regulation falls short.
A new asset class, cryptocurrencies has emerged with the advent of digital banking, posing a threat to established financial standards and laws. However, the US Securities and Exchange Commission (SEC) must monitor them because of their volatility, speculative character, and potential for abuse.
The Securities and Exchange Commission (SEC), which has long been in charge of regulating the securities industry, is now at the forefront of this emerging financial sector. But is it what we’re looking for?
Cryptocurrency relies on a technology that is radically different from that used in traditional banking. It’s a kind of digital asset backed by cryptography and based on blockchain, a distributed ledger system.
Bitcoin was the first and still most widely used crypto that used this revolutionary technology, and since then dozens of “altcoins” have emerged.
The dispersed nature and absence of command and control stem from more than simply technical peculiarities. They are fundamental to the concept of decentralization at the heart of cryptocurrency. On the other hand, regulatory organizations like the SEC have difficulties due to these same characteristics.
The Securities and Exchange Commission (SEC) was set up to oversee the regulation of securities, which include stocks and bonds. Its function is to safeguard capital and promote market efficiency and capital creation. However, cryptocurrencies defy easy classification due to their distinctive features.
The SEC’s crypto regulatory strategy has been criticized for incorrectly classifying cryptocurrencies as securities. While it’s possible that certain cryptocurrencies may serve a comparable purpose to securities, most do not.
To some extent, cryptocurrencies like Bitcoin may be used as a means of trade. On the other hand, a utility token, like Filecoin, may be used to get access to a certain service. A stablecoin, on the other hand, is tied to reserve assets such as Tether.