Brett Redfearn, who is the director of the Securities and Exchange Commission (SEC) has highlighted some of the issues regarding the absence of self-publishing by various exchanges which are trading in digital assets. Later, Redfearn said in an Interview that level of self-reporting by Crypto Exchanges as “unsatisfactory”.
After this, SEC Chairman Jay Clanton said that Initial Coil Offerings (ICOs) are securities which should be recorded with the Organization. As per Chris Butler, who is the president of URAllowance, the most important reason why exchanges are not disciplined to provide reports to the SEC is due to the uncertainty of various laws which are there in Crypto Space.
He also states, “Exchange owners know that providing reports will have a great effect on their exchanges. Hence, till the time specific administrative laws are made for ICOs and tokens, exchange owners will go against sentiment, but will not break laws.”
Later on, exchanges will also not agree with the SEC's self-reporting needs as they want to enhance trading activities on their exchange platforms, states, Jori Falkstedt, the CEO of GlobalSpy.
He further added, “Exchanges are not providing details as it is more beneficial for them to have more ICOs on their exchange. This may lead to SEC Crackdown.”
Carl Kirchhoff, CEO of Sportsfix states, rules are very much important to provide best investor protection and also to support the public in various operations of Cryptocurrency exchanges in the US.
In March 2018, SEC released a list of all the unregistered ICO companies in which about 80 firms were charged. Redfearn notes are sending anxiety in the market with players are supporting for an upcoming crackdown on exchanges.
Butler also states that all the exchanges who are selling tokens in the US without reporting to SEC should be ready for a lawsuit in court in upcoming months. He also believes that till then all the uncertainty in crypto-laws will be solved.
As soon as rules are made, SEC will target all those exchanges in the country. Redfearn also stated that SEC is fully determined to make strong Crypto rules and more information will be released soon.
He states that Crypto Industry will be working like Banking in upcoming years. Also, there will be compulsory checking of AML and PEP investigations, which will make it more valuable.
A Possible solution
There is a great dilemma in the Crypto World. Also, trading platforms are working in their own way and considering that they should not report to the SEC but manager thinks in a different way. Alex Karasulu, who is the founder and CTO of OptDyn believes that exchanges should follow the common approach which is being used by some players in the market to conform to SEC rules.
He states few firms are developing a unique and effective approach which includes developing SEC obedience with token contracts for both security and utility tokens. The capability which is needed for conformity involves transactions at the token level, and on the basis of KYC/AML verification, citizenship, and authorized investor status. All the above prerequisites help utility tokens to immediately agree with SEC rules D and S.
This approach may cause conflict, but it will put trading platforms in a safer place.
This is the most effective approach, as it will lead to various conflict among exchanges in industry, however, it will keep exchanges in the safe zone as rules are built at the token level. Tokens will not worry about how the exchange works and manages themselves independently. As soon as all the issues get cleared and SEC provides a detailed information, all the demands will be fulfilled by token contract.