- The U.S. Securities and Exchange Commission (SEC) has introduced new rules to prevent fraud, manipulation, and deception in security-based swap transactions.
- The SEC has also classified 67 cryptocurrencies as securities, including popular coins like Cardano, Solana, Filecoin, and Polygon. These new rules could be applicable to crypto as well.
The U.S. Securities and Exchange Commission (SEC) is making a greater push of introducing rules for the crypto industry. On Wednesday, June 7, the SEC announced the introduction of new rules to prevent fraud of Securities-Based Swap (SBS) entities.
Along with the prevention of fraud, the new rules will ward off any other kind of manipulation and deception linked to security-based swap transactions. The anti-fraud and anti-manipulation rule of the SEC has been designed to prevent any kind of misconduct linked to any transaction involving the purchasing and selling of the security-based swap. Speaking on the development, SEC Chair Gary Gensler said:
Any misconduct in the security-based swaps market not only harms direct counterparties but also can affect reference entities and investors in those reference entities. Given these markets’ size, scale, and importance, it is critical that the Commission protect investors and market integrity through helping prevent fraud, manipulation, and deception relating to security-based swaps. Today’s set of rules will do just that.
The market regulator has introduced new rules that discourage any actions intended to force or manipulate Chief Compliance Officers of SBS entities in carrying out their duties according to the existing securities laws. These officers have significant responsibilities, and the rules aim to protect them from undue influence or coercion.
Application of the Rules to Crypto Ecosystem
As we know, the US SEC is a regulator for the broader financial of the US, the recent rules guiding the securities-based trading platform will also be applicable to the crypto ecosystem.
This week itself, the US SEC has filed major lawsuits against crypto exchanges Binance and Coinbase for violating the securities laws. The SEC stated that the two exchanges have been trading digital assets that qualify as securities.
The SEC has labeled 67 cryptocurrencies as securities, including popular coins like Cardano, Solana, Filecoin, and Polygon. This classification affects exchanges that allow the trading of these coins. It means that these cryptocurrencies are now subject to stricter regulations.
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The SEC’s new rules are likely to disrupt the smooth trading of these cryptocurrencies. Robinhood, a commission-free brokerage, is considering removing some of the cryptocurrencies that the SEC has classified as securities. Dan Gallagher, Robinhood’s legal chief appraised the US Congress of this situation adding that the brokerage is “actively reviewing” the regulator’s analysis “to determine what if any, actions to take”.
Even with the recent regulations, the crypto market may experience uncertainty in the near future.
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