SEC increases regulatory efforts in the Crypto Assets sector

Recently, the U.S. Securities and Exchange Commission ( SEC ) has significantly increased its regulatory efforts in the Crypto Assets sector. With Facebook launching the Libra project, the focus of the SEC and other regulatory bodies on Crypto Assets has greatly intensified, frequently holding hearings and increasing the number of charges and fines.

On September 24, the U.S. Congress held a hearing on the regulatory issues of Crypto Assets and Libra themed "SEC Regulation: The Watchdog of Wall Street." SEC Chairman Jay Clayton stated that the regulation of ICOs remains a challenge, and existing securities laws have not fully addressed the issues. The SEC's current regulatory approach still prioritizes investor protection while seeking broader and more effective regulatory methods.

SEC Commissioner Jackson believes that the SEC's existing rules are indeed lagging behind the development pace of the encryption industry and should move towards encouraging Crypto Assets and improving industry transparency.

In fact, recent months have seen an increasing number of ICO projects under scrutiny by the SEC, with fines and accusations emerging frequently. According to statistics, since August, the SEC has filed lawsuits against multiple companies involved in ICO projects, digital asset exchanges, blockchain technology companies, rating agencies, and more, with publicly disclosed penalty amounts ranging from $260,000 to $10.24 million.

The following are the 6 major cases of accusations by the SEC in the Crypto Assets field since August:

On August 12, the SEC filed a lawsuit against Reginald Middleton and his two companies, accusing them of fraud and an unregistered ICO, and froze assets allegedly related to a $15 million ICO fraud.

On August 12, the SEC filed a lawsuit against the blockchain company SimplyVital Health Inc. for issuing unregistered securities and demanded the return of the funds raised.

3. On August 20, the SEC imposed a fine of $260,000 on the crypto analysis company ICO Rating for failing to disclose the compensation received for providing positive ratings to projects.

On August 29, the SEC filed a lawsuit against Bitqyck Inc. and its founders, accusing them of deceiving investors and operating an unregistered exchange, with penalties including the return of $13 million in raised funds and a fine of $10.24 million.

On September 18, the SEC sued ICOBox and its founder Nikolay Evdokimov for violating U.S. securities laws, accusing them of being unregistered brokers and engaging in illegal securities offerings.

6. On September 23, the SEC accused Fantasy Market and its founders of illegally issuing an ICO, claiming that their ICO plan involved fraudulent activities.

The SEC's stance on Crypto Assets is clear: Digital currencies generated from ICOs are considered securities and must be regulated under securities law; Bitcoin is not classified as a security and is outside the SEC's regulatory scope; Digital currency ETFs fall under the SEC's regulatory jurisdiction. The SEC requires all ICO projects to comply with existing securities regulations and register, or they will face severe crackdowns.

Despite the SEC's increased regulation of illegal financing, it is also trying to open more compliant channels. In July of this year, the SEC approved two projects to issue digital currencies via Reg A+. As of October 2018, the SEC has approved 39 STO projects.

As the application scope of Crypto Assets expands, global regulatory agencies are becoming increasingly cautious. Especially after Facebook announced the Libra project, the world has refocused on digital currency. This means that a large number of private investment institutions will enter the Crypto Assets field, the digital economy will rise rapidly, challenging the sovereign currency status of various countries, and bringing impact to the financial currency system. This also compels regulators in various countries to accelerate their regulatory layout in the Crypto Assets field.

Crypto assets, as a special form of investment, are regulated differently from traditional securities and payment systems. Since the birth of Bitcoin in 2008, the crypto industry is still in its early stages, and relevant regulations are continuously being explored and improved. The future development of regulation remains uncertain and requires close attention.