Exchanges have three options after SEC trading announcement: Ripple CEO

Posted: 8 March 2018 4:20 pm
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Brad Garlinghouse explains that the crypto market is overreacting to the SEC’s latest regulatory comments.

Following the Securities and Exchange Commission’s (SECs) public statement on cryptocurrency exchanges this week, Ripple chief executive Brad Garlinghouse says exchanges only have three options available to them.

The SEC’s statement on potentially unlawful online platforms for trading digital assets, published by the regulator’s Divisions of Enforcement and Trading and Markets, suggests that 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”.

Garlinghouse took to Twitter to explain that the crypto market is overreacting to the SEC’s comments and that exchanges can either de-list their initial coin offerings (ICOs), register with the SEC or shut their doors.

In a subsequent tweet the Ripple boss also took umbrage with those who are claiming there is “regulatory uncertainty” surrounding the industry, insisting that the national regulator has been “consistent and clear”.

As part of its statement, the SEC advises that individuals interested in buying and selling digital currencies will only be afforded protections by federal securities laws and SEC oversight if they use a platform or entity registered with the SEC, such as a national securities exchange, alternative trading system or broker-dealer.

Earlier this week, SEC chairman Jay Clayton reinforced the regulator’s message to potential digital currency traders on the risks involved with initial coin offerings (ICOs) during an interview with Fox Business.

What else is the SEC doing?

Clayton and Commodity and Futures Trading Commission (CFTC) chairman J. Christopher Giancarlo asserted they would “devote a significant portion” of resources to inspecting and surveying the unseasoned ICO market.

Should you or shouldn’t you buy the latest cryptocurrency token? Last month SEC office of investor education and advocacy director Lori Schock decided to answer this query in an informal post published on

Earlier in February, the SECs Office of Compliance Inspections and Examinations (OCIE) published its annual list of priorities after SEC chairman Jay Clayton fielded questions concerning the oversight role of U.S. regulators with regards to virtual currencies at an open session Senate Committee hearing in Washington D.C.

OCIE plans to monitor the growth of digital currencies and initial coin offerings (ICOs), while examining registrants involved in offers and sales to ensure investors receive adequate disclosures about associated risks.

This systematic strategy may reveal answers to some of the questions posed by the Senate Committee during the hearing — in particular queries put forward by Senator Jack Reed concerning financial systemic risks.

In a staff letter distributed in January, the SEC advised that cryptocurrencies and related products pose “significant investor protection issues” and, for now, cannot be offered as exchange-traded funds (ETFs).

In November last year, the SEC posted an investor alert issuing a caution to potential investors seeking an “easy payday” by purchasing or signing up for paid-to-click memberships and advertising product packs.

You can learn all about different exchanges, understand exactly how to buy and sell cryptocurrencies, calculate your taxes, discover digital wallets to hold assets and explore a list of all the alternative coins on the market.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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