Cryptocurrency is digital money and is still largely unregulated in many parts of the world. It is not uncommon for crypto investors to lose funds to scam crypto coins and exchanges. As the United States is a key player in the global cryptocurrency market, the U.S. Securities and Exchange Commission (SEC) has decided to focus more on imposing regulations in the crypto markets.
The SEC is a financial regulatory agency in the United States that is responsible for overseeing the activities in the securities markets. Crypto trading can occur on exchanges or as CFDs via a reputable and regulated crypto currency broker.
The main goal of the SEC’s regulation in the crypto markets is to prevent investors from being manipulated by fraudulent crypto exchanges and tokens.
The Need For The Intervention Of SEC In The Cryptocurrency Markets
Humans are always looking for ways to make money from every new technological trend. The massive price rise of bitcoin has rapidly increased the popularity of cryptocurrencies.
This popularity many times sparks the Fear Of Missing Out (FOMO) for many new investors that do not fully understand how the crypto market works. The FOMO in the crypto market has become a major point of exploitation by scam crypto exchanges and coins.
The crypto market of today is synonymous with how the capital markets were operated in the 1920s. The SEC was charged with the responsibility of overseeing the capital markets and any other security that may arise in the future. It is easy to wonder if cryptocurrency is a security.
The U.S Supreme court identifies securities using the Howey test which states that an “investment contract” is a security if it is:
“a contract, transaction, or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”
This shows that cryptocurrency is a security that needs the intervention of the SEC to help protect crypto investors from…
