Bitcoin and Ether not secure
August 24, 2018 7:01 am,
Jay Clayton, Chairman of SEC, USA made a statement stating that SEC will not be bending any rules anytime soon for the cryptocurrencies. While Bitcoin remains a commodity, all ICO tokens ie the coins offered during the fundraising process classify as securities. SEC has rejected the request to allow the BZX Exchange to list and trade off as a shared Winklevoss Bitcoin Trust, Bitcoin-based ETP. In order to allow ETP, the SEC would have to change the rules. The reason SEC refused to do so is that BZX Exchange does not have sufficient safeguards to prevent market manipulation.
SEC believes in the basic definition of a token, that is “Where a digital asset is taken into a venture and then you get a return that shows security”. They believe in the regulating the offering of that security and regulate the trading of that security.
Organizations have come in support of SEC and regulators to view the virtual currencies as utility tokens. Utility tokens are more practical than securities and allow customers to access the company’s products directly. These utilities are exempted by SEC but securities play an important role. People invest in securities expecting returns which leads to an increase in the scrutiny of the regulations.
With the increase in the decentralized network of Ether, SEC is doubting the securities. Some predict that there soon are going to be more and more cryptocurrency that is going to go in the way of decentralization. This may lead to regulations that function on them as securities won’t be required anymore. This doesn’t mean though cryptocurrency can escape the scrutiny of US regulators. SEC has held on to almost all so-called token sales and ICO subject to regulations. However many tokens run on top of Ether itself, thus complicating the issue.
In April, the SEC found 2 owners making more than $32 million, by selling fraudulent and unregistered investments. Though, now it seems that the owners of Bitcoin and Ether are safe but investing in them may not be that very safe.