Trading laws may still apply to cryptocurrencies

| Nov 13, 2020 | Firm News

Cryptocurrencies are still young, but they have grown exponentially since they first came on the market. People now even use cryptocurrencies as investment tools, especially when demand for specific digital currencies lead to spikes in value.

Over the past few years, many people who invest in these currencies have waited to see whether the U.S. Securities and Exchange Commission would attempt to regulate the market. It has issued several statements affirming that it does and will expand this control.

SEC demands registration

According to CNBC, the SEC continues to examine how best it can apply its regulations to the new marketplaces created by and for digital currencies. As a starting point, it requires all platforms that facilitate the buying and selling of cryptocurrencies to register with the SEC. Otherwise, the platforms may become unlawful.

Currency managers seek exemption

Some currencies remain exempt from the SEC by choice. To do this, the companies go through an extensive review process to ensure they do not meet the requirements to register with the SEC under U.S. law. Whether the law may change to invalidate these efforts remains a possibility.

Traders panic

The SEC did not single out any specific digital currency, but Bitcoin plunged when it made its announcement. It plummeted 10% in value below the $10,000 psychological key level. In spite of the panic created among Bitcoin traders by this announcement, some industry experts say the SEC feels more concerned about newer and smaller digital currencies on the market.

In spite of this, Bitcoin users remain wary of SEC involvement. According to Bankrate, it first came on the market in 2009 and remains a volatile currency.