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The SEC intensifies regulation of Crypto Assets, frequently taking action against ICO projects recently.
Crypto Assets regulation tightening, the US SEC has recently taken frequent actions.
Recently, with Facebook launching the Libra Crypto Assets project, the attention of U.S. regulators on the Crypto Assets field has significantly increased. The Securities and Exchange Commission (SEC) and other agencies have not only frequently held hearings but have also intensified their accusations and penalties against related companies.
On September 24, the U.S. Congress held a hearing on the regulatory issues surrounding Crypto Assets and Libra, themed "SEC Regulation: Wall Street's Watchdog." SEC Chairman Jay Clayton stated at the meeting that ICO regulation remains a challenge, and the existing Securities Act has not fully addressed the issue. Currently, the SEC's regulatory approach still prioritizes investor protection, while also seeking broader and more effective regulatory methods.
SEC commissioner Jackson believes that the SEC's existing rules are indeed lagging behind the development speed of the encryption industry and should be adjusted towards encouraging the development of Crypto Assets and improving industry transparency.
In fact, more and more ICO projects are being monitored by the SEC, with fines and charges occurring frequently. According to statistics, since August, the SEC has filed lawsuits against several companies, including ICO project companies, digital asset exchanges, blockchain technology companies, and rating agencies, with publicly disclosed penalties ranging from $260,000 to $10.24 million.
The following are six major charges filed by the SEC in the crypto assets sector 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 involved in a $15 million ICO fraud.
On August 12, the SEC filed a lawsuit against the blockchain company SimplyVital Health, Inc., accusing it of issuing unregistered securities and demanding the return of raised funds.
On August 20, the SEC fined the Russian crypto analysis company ICO Rating $260,000 for failing to disclose the compensation received for projects that were given favorable ratings.
On August 29, the SEC filed a lawsuit against Bitqyck Inc. and its founders, accusing them of operating an unregistered digital asset exchange, demanding 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, accusing them of violating U.S. securities laws.
On September 23, the SEC charged the online adult entertainment platform Fantasy Market and its founder with illegally issuing an ICO.
The SEC's attitude towards Crypto Assets is very clear: digital currencies generated from ICOs are considered securities and must be regulated according to securities laws during the issuance process. Bitcoin, however, is not generated from ICOs and therefore falls outside the SEC's regulatory scope. However, digital currency ETFs are within the SEC's regulatory domain. Currently, the SEC requires all ICO projects to comply with existing securities regulations and register accordingly; otherwise, they will face severe penalties.
Although the SEC has intensified its regulation of illegal financing, it is also trying to open up more compliant channels. As of October 2018, the SEC has approved 39 STO projects and 2 ICO projects.
As the application of Crypto Assets expands in the field, regulatory agencies around the world are becoming increasingly cautious about this sector. Especially after Facebook announced its plan to issue the Libra stablecoin, the world is refocusing 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, and it will also challenge the status of sovereign currencies, bringing new shocks to the entire financial currency system. This also compels regulatory authorities in various countries to accelerate their regulatory layout in the Crypto Assets sector.
Crypto Assets, as an investment method that coexists with risks and returns, have characteristics different from other securities and payment systems, and their regulatory methods need to be different as well. Since the birth of Bitcoin in 2008, the development of the crypto industry is still in its early stages, and its regulation is still being explored and improved.