According to SEC officials, illegal crypto tokens are still on some exchanges. This will cause stricter crypto rules.
The US Securities and Exchange Commission (SEC) has been advocating for the regulation of cryptocurrencies since 2017, stating that it has the authority to supervise numerous digital tokens and the platforms that facilitate their trade.
However, the Wall Street Journal says the SEC can only regulate crypto tokens classified as securities; it will consider others as illegal. This category includes assets such as stocks and bonds.
SEC President Gary Gensler points out that many of them are illegally distributed because securities can only be sold to the public if registered with the SEC and if the issuers provide financial information and disclosure of assessed risk.
Selling securities, including cryptocurrencies, to the public without registration violates investor protection laws, and authorities can hold the issuers liable.
The SEC and US courts have identified 76 cryptocurrencies as securities since the end of 2017. Of those 76, 16 were available for trading on one or more major US crypto exchanges. According to the latest SEC report, the number of such cryptocurrencies has tripled over the past year.
The report comes amid an ongoing standoff between the SEC and crypto companies, which complain that the United States lags behind other countries in digital asset rules.
At the Dubai Finance Summit on Monday (May 8), Ripple’s CEO told CNBC that other countries were overshadowing the US in the field, making him the latest in a line of critics. He added that Njerg’s company would spend about $200 million defending itself in court pending the resolution of the lawsuit filed by the SEC in December 2020.
More Restrictive Measures Against Cryptos
On the other hand, the SEC states that at the moment, the largest crypto exchanges offer for trading at least 12 disputed cryptocurrencies, i.e., those that have the “weight” of securities and which should fall under the Commission’s jurisdiction.
In 2022, the SEC launched 30 restrictive measures to control cryptocurrencies, an increase of 50 percent compared to the previous year. In the first months of 2023, the SEC issued 13 enforcement suspensions, an increase of more than 25 percent over last year’s numbers.