Business & Finance

SEC and it’s Fine-Tooth Comb for Crypto Brokers

Badgering or Nah?

U.S. Securities and Exchange Commission (SEC) has remained active in streamlining cryptocurrency operations throughout this year. This is to make the market well regulated and fraud or scam free to the greatest extent possible. It has recently begun dissecting broker deals to find signs of misconduct and unfair dealings. The closer look at the market practices and questioning individual brokers will allow a more comprehensive understanding of the crypto market. This will promote an improvement in the dealings of brokerage houses and other brokers towards the crypto customers.

Dissecting broker deals has increased scrutiny and/or agitation of the brokers towards the SEC. This agitation may translate into an irritation of the process of buying cryptocurrency through brokers, that is if SEC begins to target and attack the operations by imposing unwanted, unnecessary checks and balances.

In the recent weeks SEC has pushed several dealers to share their trade workings with them. The questions revolve around the fees generated from trading and initial coin offerings. The agency is also looking into other personnel involved such as investment advisers and how they contribute to the crypto ecosystem.

Whether SEC has the mandate to do so is a separate debate but excessive questioning and dissection of the process may be counted as badgering. SEC has been making headlines in the cryptocurrency world ever since the appointment of their new czar officer.

In SEC’s defense, the agency is looking to implement new policies to promote investor health and security. Also to maintain fair, orderly, and efficient markets and facilitate capital formation for the new entrants in the crypto market and this is likely to help these individuals to have better fortunes in the trade.

Chairman of the SEC, Jay Clayton and Christopher Giancarlo, the Chairman of the Commodity Futures Trading Commission (CFTC), testified in front of the Senate Banking, Housing and Urban Affairs Committee to address their agencies’ regulatory framework on virtual currencies in February 6, 2018. The meeting concluded that blockchains are a reliable technology whereas virtual currencies exchanges and initial coin offerings (ICO)’s may be trouble-ridden. It was decided that SEC will introduce new market standards that exchanges must follow to allow the market to flourish and become safer for everyone.

SEC Chairman has said that he believes the ICO market is rife with fraud. He has made a point to clarify that ICO’s are not registered with SEC. Which is why his suspicion will always remain no matter how great the ICO is. The press release also emphasized:

If any person today tells you otherwise, be especially wary.. and.. If you choose to invest in these products, please ask questions and demand clear answers.

The U.S. department of Justice issued an investigation on whether bitcoin brokers manipulate prices and artificially inflate prices to make bigger chunks. The findings suggest that only smaller middle men are able to do this that too to lesser experienced new buyers. Also, this news resulted in a price fall for the currency of more than 6% on that day. However if evidence of collusion was found, the industry would have had to face a major short term hit, while in the longer firms would not have been able to do this. This would have helped in maintaining fair market clearance.

John L. Jacobs, executive director of Georgetown University’s Center for Financial Markets and Policy, said of regulators’ inquiries:

They’re trying to understand the whole ecosystem. They’re still wrestling with how to make sure that this (crypto market) an organized efficient marketplace.

While the SEC speakers have refused to comment until the spilled beans are cleaned up.

Finra, one of the brokerage regulator overseen by the SEC, sent firms a notice last month asking them to notify the agency if they get involved with digital assets. This has helped warn these firms to take immediate notice and fix any wrong doings, if any, before they are penalized for them. While law cannot be retrospective, crypto may be an exception and the SEC makes means work for itself anyway.

Khunsha Javed

A Filmmaker, PR enthusiast & Editor of BlockPublisher-Unfiltered. I like things that make my brain tingle. Email: or

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