SEC Reviews Behavior of Bitcoin Brokers
While cryptocurrency allows individuals to remove the middlemen for transfers, some users still rely on brokers to ensure that their digital assets are safe. The United States Securities and Exchange Commission (SEC) is looking at this relationship between users and brokers to determine how involved these brokers actually are.
According to Bloomberg, the brokers are under the SEC’s scrutiny. The SEC is looking at issues like trading fees and level of assistance that is provided by these financial intermediaries.
On the surface, it may look as if the SEC is just trying to cause problems in the cryptocurrency industry, however, the reality might just be the opposite. The regulator is basically exercising their due diligence to ensure that they understand this relatively new industry to the best of their ability.
John L. Jacobs, the executive director of the Center of Financial Markets and Policy at Georgetown University has tried to explain the SEC’s efforts in understanding the crypto industry. He said,
They’re trying to understand the whole ecosystem. They’re still wrestling with how to make sure that this an organized efficient marketplace.
The review process is being carried out by the Office of Compliance Inspections and Examinations(OCIE) who will pass on the results to the SEC for further investigation if needed. The OCIE has previously discussed the role of brokers. It said,
The cryptocurrency and ICO markets have grown rapidly and present a number of risks for retail investors. Areas of focus will include, among other things, whether financial professionals maintain adequate controls and safeguards to protect these assets from theft or misappropriation.
Anonymous sources have explained that firms have been previously requested to inform and advise the SEC if and when they participate in any crypto related business. Some businesses have been complying with this requirement and even taking their own measures to actively seek the SEC’s advise.
Jeff Bandman, principal at Bandman Advisors said,
This seems to be transitioning from where the house is on fire to incorporating supervision of the intermediaries.