The United States Securities and Exchange Commission (SEC) says it isn’t going to be swayed by technical definitions when it comes to its oversight of cryptocurrency exchange platforms. This pronouncement comes barely a day after the Commission brought up charges against the founder of EtherDelta – a decentralized virtual currency trading platform.
Centralized/Decentralized Exchanges – Semantics and Nothing More
If you thought running a decentralized cryptocurrency exchange (DEX) exempted you from SEC oversight, think again. As far as the Commission is concerned, the issue of centralized and decentralized exchanges is simply semantics.
Speaking to Forbes, the head of the SEC’s cyber unit, Robert Cohen, said:
The focus is not on the label you put on something or the technology you’re using. The leveled is on the function, and what the platform is doing. Whether it’s decentralized or not, whether it’s on a smart contract or not, what matters is it’s an exchange.
Cohen’s statements refer to decentralized or blockchain-based cryptocurrency exchanges and ensuring that they comply with existing regulations. For the SEC, the crux of the matter revolves around operating unregistered exchanges.
Operators Remain Responsible
Presently, it appears that the SEC plans to go after the operators of these DEX platforms. Take EtherDelta, for example, the charges were leveled against the creator, Zachary Coburn, and not the exchange itself.
This move is perhaps because it is much easier to target the operators than to shut down a decentralized platform. However, such a tactic might prove potentially problematic when dealing with highly anonymous DEX platform operators.
In the case of Coburn and EtherDelta, the SEC charged Coburn of running an unregistered exchange that traded securities. While not admitting or denying the charges, the Commission says Coburn is being cooperative and has agreed to pay a total of $383,000 in various fines and penalties.
SEC Pursuing All-inclusive Cryptocurrency Regulatory Paradigm
The inclusion of DEX platforms is further proof of the SEC’s drive to bring some sanity in what some commentators have dubbed the cryptocurrency ‘Wild West.’ Recently, the Commission announced its intention to critically examine the activities of investment advisers in the virtual currency trading space.
Earlier in the week, Live Bitcoin News reported about the SEC wanting to make the fight against digital currency scams its top priority. Since the beginning of 2018, the regulatory watchdog has taken numerous steps to curtail ICO scams.
What do you think about the comprehensive approach to regulating cryptocurrency exchanges being adopted by the SEC? Let us know your thoughts in the comment section below.
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