Scams and fraudulent activities have marred the cryptocurrency market since its inception. As a result of the prevalence of illegal and manipulative activities across the cryptocurrency market, the official regulatory bodies like the United States Securities and Exchange Commission (SEC) have not been very kind in the cases related to cryptocurrencies over the year.
This past Sunday, the SEC temporarily suspended trading in two securities that were linked to cryptocurrencies. The two securities were Bitcoin Tracker One (CXBTF) and Ether Tracker One (CETHF). The main reason stated by the SEC regarding this suspension was the confusion that was faced by the investors regarding these instruments. As per the official verdict made by the regulatory body, the suspension will continue until September 20.
Immediately following the decision made by the SEC, the markets for both bitcoin and ethereum saw a sudden decline. In the hindsight of the decision made, bitcoin has dropped by 1.21% and ether has dropped by -2.71% in the past 24 hours, as per CoinMarketCap at the time of writing. Bitcoin has dropped below the $6,400 mark and is now floating around $6,330. Ether, on the other hand, is floating below the $200 mark and is currently placed at around $197.
In the statement presented forward by the SEC, all the brokers are warned against the trading of Bitcoin Tracker One and Ether Tracker One securities. It is explicitly stated in the official verdict that “The Commission cautions broker-dealers, shareholders, and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by the company.”
Enforcement action is to be taken by the Commission if brokers allow trading in CXBTF or CETHF. It is stated by the regulatory body that:
If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
All in all, we are seeing that strict actions are being taken by the SEC in order to protect the investors of the crypto market. Although it might seem that the SEC is being harsh on this emerging market, this strictness can really prove to be beneficial for this market, in the long run, ensuring more security and transparency for the investors entering it.