The Securities and Exchange Commission (SEC) on Wednesday announced that all platforms used for exchanging cryptocurrencies, such as bitcoin and ethereum, must register with the agency.
“If a platform offers trading of digital assets that are securities and operates as an ‘exchange,’ as defined by the federal securities laws, then the platform must register with the SEC as a national securities exchange or be exempt from registration,” the SEC said in a statement.
The SEC also warned in its statement that many places where cryptocurrencies are currently being exchanged aren’t SEC-registered despite their appearances and are actually “potentially unlawful.”
“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not,” the SEC said. ” Many platforms refer to themselves as ‘exchanges,’ which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”
In an effort to help investors, the announcement by the SEC also included tips for investors on how to best choose the right platforms for trading cryptocurrency.
The announcement adds to the regulatory agency’s continuing work toward obtaining better control over the platforms and exchanges where cryptocurrencies are traded.
In January, SEC Chairman Jay Clayton said at a Senate hearing that he had concerns over the potential for price manipulation on cryptocurrency exchanges. He also said many digital tokens he had seen were actually securities and should be regulated as such.
During the hearing, Clayton promised that his agency would scrutinize the area further and take more enforcement action.
As of last week, the SEC has reportedly launched its own probe of many cryptocurrencies, sending out numerous subpoenas and information requests to companies that had issued digital tokens.
The price of bitcoin and ethereum, the two largest cryptocurrencies in terms of market capitalization, slumped by roughly 8 percent and 9 percent following the SEC’s statement Wednesday.