The SEC keeps close tabs on the cryptocurrency industry. Companies offering crypto trading are of particular interest to the agency. A further scrutiny of brokerages offering this functionality looms on the horizon. This new measure can bring more legitimacy to Bitcoin trading in the long run.
Crypto Brokerages Face Scrutiny
It is understandable that the Securities and Exchange Commission has concerns about any cryptocurrency business. This industry still goes largely unregulated and there has been an increase in the number of scams of late. Weeding out the illicit offerings is one of the priorities for the SEC. The agency’s crackdown on potentially malicious ICOs has paid dividends in this regard.
Expanding this approach to encompass cryptocurrency brokerages is a logical decision. The SEC has sent out inquiries to various brokerages regarding their business practices. Additionally, the agency wants to learn how service providers deal with clients. A lack of transparency plagues the cryptocurrency brokerage industry. Especially when it comes to fees generated from trading and financing, there are a lot of unanswered questions.
Combating fraud in the cryptocurrency world is an ongoing process. The ICO market has shown there are plenty of projects with not-so-honest intentions. Whether or not that affects cryptocurrency brokerages as well, remains to be determined. No major banks offer this type of functionality at this time. Only smaller brokerage firms have ventured into cryptocurrency, which further warrants additional scrutiny.
SEC Seeks to Offer Legitimacy
Gaining a better understanding of cryptocurrency shows the SEC aims to foster, rather than ban. If the agency aimed to prohibit Bitcoin activity, they could have taken such measures a long time ago. Instead, the agency is taking steps toward creating a more secure ecosystem for all parties involved. They began with ICOs, moved up to hedge funds, and now are sending inquiries to brokerage firms.
All of these steps are necessary to bring legitimacy to cryptocurrency. Making sure all companies offer legitimate products and services is an important step toward doing so. Without oversight, companies can run amok, which puts investors at risk. The SEC is playing its part in ensuring cryptocurrency can thrive in the United States.
These investigations do not mean that any particular company is under suspicion of performing illicit operations. Instead, it is a necessary step toward understanding how cryptocurrency brokerages operate. With this knowledge, proper regulatory measures can be introduced to this industry. Some companies have been more forthcoming when it comes to sharing information. It shows there is still a fair bit of uncertainty which needs to be addressed.
What are your thoughts on the SEC’s probe of cryptocurrency brokerages? Can its involvement help foster legitimacy and security or will it do more harm than good? Let us know in the comments below.
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