The Securities and Exchange Commission said Wednesday that platforms offering trading of digital assets that are securities and that are operating as an “exchange” under federal securities laws must register with the SEC as a national securities exchange or be exempt from registration.
The agency’s divisions of Enforcement and Trading and Markets, in their Wednesday Statement of Potentially Unlawful Online Platforms for Digital Trading, said that the SEC is concerned “that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not.”
Many platforms refer to themselves as “exchanges,” which can give the [false] impression to investors that they are regulated or meet the regulatory standards of a national securities exchange, the agency groups said.
Such platforms, the agency said, are a popular way investors can buy and sell digital assets like coins and tokens offered and sold in so-called Initial Coin Offerings.
The platforms “often claim to give investors the ability to quickly buy and sell digital assets,” the SEC stated. “Many of these platforms bring buyers and sellers together in one place and offer investors access to automated systems that display priced orders, execute trades, and provide transaction data.”
The securities regulator has found that a number of the platforms provide a mechanism for trading assets that meet the definition of a “security” under the federal securities laws.