SEC Issues New Set Of Cautions For Investors In Crypto Asset Securities

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The latest came from the SEC’s Office of Investor Education and Advocacy, despite the widespread opinion among the crypto community that there is no clarity on regulation. Although the SEC maintains that existing laws governing the securities market does fully apply to the crypto assets, most industry players argue that those laws are incompatible for these assets. However, many would agree with the SEC’s views that the risk of loss for individual investors in the crypto market is significant, as was seen after the recent FTX collapse and the Terra network failure in 2022.

Crypto’s Non-Compliance

The SEC warned that entities offering crypto investments or services may not be complying with relevant law, including federal securities laws. This, however, begs the very question from the crypto players around the lack of regulatory clarity. The agency also warned investors about the ‘Proof of Reserves‘ concept. Adding that the disclosure may only provide a part of the story, it said the proof of reserves “does not tell customers the whole story about the entity’s liabilities.”

The SEC warning also mentioned the role of fraudsters in exploiting the popularity of crypto market, while also mentioning the role of celebrity endorsements for crypto products and services. Meanwhile, the Bitcoin price rallied over the past few weeks amid rising concerns about the larger impact of the ongoing banking crisis.

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