SEC Making Efforts to Understand Crypto Market, Looking into Brokerages Dealing in Crypto

By Anjali Tyagi
Published August 4, 2018 Updated August 4, 2018
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SEC Making Efforts to Understand Crypto Market, Looking into Brokerages Dealing in Crypto

By Anjali Tyagi
Published August 4, 2018 Updated August 4, 2018

SEC has been reportedly looking into brokerages that deal in cryptocurrencies and making inquiries about their fees, how they deal with clients, the involvement of investment advisors and much more in order to understand the booming crypto market.

SEC looking into brokerages dealing with cryptos

The US Securities and Exchange Commission (SEC) is looking into brokerages that are dealing in cryptocurrencies so that authorities can know more about the currently expanding market.

Reported by Bloomberg, people close to the matter revealed that the main regulator of Wall Street is further boosting the scrutiny of these brokerages as there is a fear of market being full of misconduct.

Recently, the SEC has been asking these brokerages questions about their business practices and how they deal with their clients. Also, the involvement of investments advisors have also been included. Apart from these questions, SEC is also seeking information about the fees generated from trading, financing and initial coin offerings (ICO).

In the past year, the crypto market is getting increased attention from the authorities especially regulators like SEC chairman Jay Clayton. Clayton is concerned about the market and believes that ICO market is rife with fraud.

The enforcement unit of the agency has even sued those firms that have violated the security laws through ICOs, in the past. Moreover, the Justice Department has also opened a criminal probe into the Bitcoin price manipulation if traders have been manipulating it.

There is no involvement of Wall Street per se into the crypto market, so, for now, it is dominated by small brokerage firms that currently deal with cryptocurrencies.

Also, read: SEC Could Approve Bitcoin ETF 18 Month Away – Says Crescent Crypto’s CEO

Regulators making efforts to understand crypto ecosystem

The ongoing review by SEC, led by the Office of Compliance Inspections and Examinations is looking for information from hedge funds regarding how exactly they price digital investments. This has been an expansion to the requests made by the self-regulators such as National Futures Association and Financial Industry Regulatory Authority to the member companies about their cryptocurrency dealings.

Though Clayton’s spokeswoman hasn’t said anything on the matter, the executive director of Georgetown University’s Center for Financial Markets and Policy, says these inquiries indicate that regulators are trying to understand the whole ecosystem.

He further said,

“They’re still wrestling with how to make sure that this an organized efficient marketplace.”

The primary function of OCIE to conduct examinations with the aim to protect investors and ensure market integrity. In its February report, OCIE has stated that,

“The cryptocurrency and ICO markets have grown rapidly and presented a number of risks for retail investors. Areas of focus will include, among other things, whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation.”

In the crypto market where some brokerages have reported their involvement to the SEC, others have been less than forthcoming. Only last month, NFA, the industry-funded regulator for the derivatives industry has said that it would be requiring the firms that deal in crypto derivatives to make additional disclosures.


The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
About Author
Anjali Tyagi
440 Articles
Having a background in writing, I worked on a wide array of industry topics and have recently entered the world of Blockchain and Cryptocurrency.

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