Investors Should Proceed with Caution in Evolving Regulatory Landscape
May 3, 2018 — Wolters Kluwer today announced the release of a new white paper, SEC Warns Cryptocurrency Trading Platforms Raise Significant Federal Securities Laws Compliance and Liability Risks. The white paper examines recent Securities Exchange Commission (SEC) guidance that some online trading platforms may not be registered with the SEC, meaning related protections and SEC oversight would not be available.
According to the white paper, investors and other market participants need to be aware that not all cryptocurrencies and blockchain-related assets are the same. With no bright line distinction, market participants need to proceed with caution to avoid the unexpected application of federal securities laws to each particular cryptocurrency or cryptocurrency-like asset, including Initial Coin Offerings (ICOs).
More specifically, the white paper examines the SEC’s public statement entitled, “Statement on Potentially Unlawful Online Platforms for Trading Digital Assets.” In addition, the white paper provides analysis of the following:
• What is a security for SEC purposes?
• Does the SEC consider cryptocurrencies or other tokens to be securities?
• What are the risks of commodity regulation for cryptocurrency and digital asset platforms?
• What is the industry and community response to this guidance?
“In light of how rapidly the cryptocurrency and cryptocurrency-related markets change, both investors and participants should proceed carefully given the recent warnings issued by the SEC and the Commodities Futures Trading Commission,” said Stevie Conlon, Vice President and Regulatory Tax Counsel for Wolters Kluwer. “The purpose of this white paper is to alert investors and participants to recent SEC guidance regarding risks concerning certain cryptocurrency exchanges and offerings under federal securities law.”