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Thursday, June 1, 2023

SEC Urges Investors to Be Cautious With Crypto Securities

SEC Urges Investors to Be Cautious With Crypto Securities – The Office of Investors Education and Advocacy of the U.S. Securities and Exchange Commission (SEC) has cautioned investors to be careful when investing in securities related to crypto assets. The agency has stated that trading platforms that deal with crypto assets may not be abiding by the federal securities laws.

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“The law requires parties such as securities broker-dealers, investment advisers and exchanges to register with the SEC, a state regulator, and/or a self-regulatory organization,” the SEC said in a bulletin on Thursday. “Moreover, entities and platforms involved in lending or staking crypto assets may be subject to the federal securities laws.”

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SEC Chair Gary Gensler has frequently expressed his opinion that many crypto exchanges are operating in the United States as unregistered securities exchanges, a stance that the SEC has previously attempted to demonstrate. Following Coinbase’s announcement of receiving a Wells Notice from the SEC, indicating a potential enforcement action related to the exchange’s listing of unregistered securities, the regulator issued a warning the next day. 

This news caused a significant drop in the value of Coinbase’s Nasdaq-listed shares, plunging up to 20% during early Thursday trading. However, the shares have since recovered roughly half of their losses, currently down by 10% at $69.32 as of the time of writing. The SEC’s recent cautionary statement regarding investing in securities related to crypto assets serves as a reminder for investors to exercise caution when engaging with trading platforms that deal with crypto assets. 

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The agency’s warning highlights the importance of complying with federal securities laws and the potential consequences for non-compliance. The recent announcement of a potential enforcement action against Coinbase underscores the SEC’s commitment to regulating the crypto market and protecting investors.


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