Cryptocurrencies suffered a severe blow yesterday when the U.S. Securities and Exchange Commission (SEC) warned that cryptocurrency exchanges need to get registered.
After this strict statement, Bitcoin’s price dropped by 10% reaching a low of $9,500, while now it has slightly recovered the price and trading at $9,773 (as of writing). Meanwhile, Ethereum fell by 7.55% to $756.29, now trading at $745.86 and Bitcoin Cash dropped by 9.14% to $1,095.77. Ripple also dropped by 7%, while now trading at $0.84.
According to the SEC, cryptocurrencies are considered as securities of investments, because each virtual coin has a value that rises and falls like stock. SEC thinks that many crypto exchanges that swap digital currencies for cash or other coins lie under the “exchange” umbrella, as defined by federal securities laws. These platforms should register themselves as a national securities exchange otherwise they will be exempted from federal protection. As per the statement;
“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.
If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration.”
Cryptocurrencies are decentralized, meaning that there is no central agency managing the money, like a bank. The coins are also protected by cryptography and money can’t be traced back to a specific individual. But the SEC’s new encouragement for trading platforms to register reveals interest of the US government to take benefits from this profitable crypto world