The U.S. Securities and Exchange Commission enters the cryptocurrency market head-on by declaring as many as 76 cryptocurrencies illegal.
These 76 digital currencies are defined as “unregistered securities” that, that is, cannot be traded under today’s U.S. financial laws. And thus they are illegal in the U.S. because they are in direct violation of investor protection laws.
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76 cryptocurrencies illegal in the U.S.
The Securities and Exchange Commission (Sec) is the federal body charged with overseeing the securities market in the United States and supervising the activities of agents who participate in it. It is, in essence, the U.S. Securities and Exchange Commission.
The news is reported by the Wall Street Journal, which explains how of these 76 tokens, 37 were allegedly involved in cases of alleged fraud. The list of 76 includes well-known names such as TerraUSD, FTT, Ripple and Dash. Off the list, however, are big names such as Bitcoin and Ethereum.
The SEC has been overseeing the cryptocurrency market since 2017. Among the body’s powers is to regulate only cryptos that can be classified as securities. Cryptos can be sold to the public only after registration with the SEC. Failure to register can possibly be remedied by offering all relevant information to the regulator.
All those cryptos sold without registration and without their operators having provided adequate financial and risk information ended up on the Sec’s blacklist. It is not ruled out that in the coming days operators may run for cover by rectifying their position.
Since the end of 2017, the SEC and U.S. courts have identified 76 cryptocurrencies as securities. Of those 76, 16 were available for trading on one or more major U.S. cryptocurrency exchanges, says the Wall Street Journal.
While the SEC points the finger at crypto traders, they complain that the United States lags behind other countries in regulating digital assets.
Squeeze on exchange platforms feared
Possible then that in the Sec’s crosshairs could also end up exchange platforms (exchanges) that allow the buying and selling of the cryptocurrencies that ended up on the blacklist. Many other exchanges could be put under scrutiny, as recently happened to Binance and Kraken.
The mesh of controls has tightened in recent times, leading some in the industry to speak of “Operation Choke Point 2.0” (Operation Choke Point 2.0).
The crypto landscape is somewhat troubled then, after another major virtual coin trading platform, Genesis Global Holdco, filed for bankruptcy in January. And after Europe considered banning cryptocurrencies at the end of 2022 because they are accused of using too much energy.
Restrictions on cryptos across North America
There is tension in the cryptocurrency markets: the crackdown by U.S. authorities comes on top of poor liquidity and an unfavorable macroeconomic situation. Bloomberg also reports that Jane Street and Jump Crypto, two of the largest cryptocurrency market makers, may be stepping back from crypto trading in the United States.
The crackdown affects the entire northern part of the continent, since Canada with the Canadian Securities Administrators (CSA) last February 22 also inserted new obligations and additional restrictions. The operator Binance thus announced its withdrawal from the Canadian market with a tweet on May 12.