The U.S. Securities and Exchange Commission (SEC) is realigning its approach to regulating cryptocurrencies. While the power of digital currencies is expanding, the SEC realizes that blanket bans are impossible. Rather, it wants to apply custom-tailored regulations tackling the unique characteristics of cryptocurrencies as well as safeguarding investors.
Increasing Power of Crypto
In the opinion of Matt Levine, a Bloomberg columnist, the crypto market is now so big that it cannot be ignored. Critics have condemned earlier efforts to ban cryptocurrencies for failing to consider the diversity of blockchain projects. The flip-flop follows after former SEC Chairman Gary Gensler characterized the vast majority of tokens as securities, which essentially left most projects in a state of regulatory purgatory.
The Need for Tailored Regulations
The SEC realizes it is not a practical step to categorize all cryptocurrencies as traditional securities. Levine argues that the SEC is well-positioned to regulate crypto because many tokens share characteristics with securities. However, existing regulations must adapt to fit the unique aspects of digital assets.
Chairman Paul Atkins signalled the opening of registration for different cryptocurrencies, which would be a step towards distinguishing regulatory regimes. The newly launched “Project Crypto” scheme promises to allow easy registration, paving the way for regulation.
Philippine SEC Takes Action
As a connected development, the Philippine SEC has also stepped up its campaign against unregistered crypto platforms in recent times. The agency has issued warning letters to a whole ten unregistered platforms like Bybit and OKX. Authorities consider these types of platforms unauthorized, posing a high risk to Filipino investors, including risks of fraud and total loss of funds.
The Philippine SEC’s actions align with its recently implemented Crypto Asset Service Provider (CASP) rules. The regulations mandate that all digital asset platforms register with it, as a step towards compliance with local regulations.
Risks of Unregistered Platforms
The Philippine SEC emphasized the risks of dealing with unregistered platforms, such as market manipulation and inability to seek redress in law for investors. The agency is moving forward to deny access to such platforms and has urged people not to invest in unregistered services.
By shifting away from blanket bans and embracing targeted rules, the SEC hopes to encourage consumer protection while encouraging innovation in the digital asset ecosystem. As noted in the Philippines, regulators are also doing enough to crack down on unregistered platforms, underscoring the need for compliance in such a fluid environment.
