The US SEC’s recent announcement regarding crypto exchanges and trading platforms has sent shockwaves throughout the crypto community, with many investors and traders concerned that the announcement heralds a potential crackdown on exchanges within the US. Highly popular exchange platform Bittrex has responded to the announcement in order to assuage investor fears, stating that tokens listed on the platform are unequivocally not securities.
The SEC announcement, published by the SEC Divisions of Enforcement and Trading and Markets on the 7th of March, warns investors of the danger associated with buying and selling digital assets. Notably, the announcement indicates that many of the assets traded on crypto exchanges may meet the definition of “securities” under federal securities laws.
“Online trading platforms have become a popular way investors can buy and sell digital assets… a number of these platforms provide a mechanism for trading assets that meet the definition of a “security” under the federal securities laws. 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 claims that platforms that offers digital assets that meet the definition of a security under federal securities laws “may be participating in the unregistered offer and sale of securities”. Bittrex, however, has published an official response that clearly outlines the legal status of assets traded on the platform.
@BittrexExchange released a statement regarding today's SEC announcement about online trading platforms. To read the full statement from Bittrex, please visit: https://t.co/yp9AQ0qUjZ If you have questions about our token listing process go to: https://t.co/p5HchOIbER pic.twitter.com/ffuEeBuzi5
— Bittrex (@BittrexExchange) March 7, 2018
Bittrex Claims Full Legal Compliance
In Bittrex’s statement, the platform references the Bittrex compliance review process, which ensures that all tokens listed on the platform are compliant with US law and do not meet the definition of a security under federal securities law:
“As a U.S.-based digital currency exchange, Bittrex is committed to incubating new blockchain technology projects and offering innovative, compliant digital tokens to our customers. Bittrex uses a robust digital token review process to ensure the tokens listed on the exchange are compliant with U.S. law and are not considered securities.”
Tokens that are listed on Bittrex are subject to a lengthy two-step review process in which they are first screened with a preliminary analysis, then subject to a more intensive full listing review in which tokens must provide legal certification that they can not be defined as a security under US law:
“Our compliance review typically requires the applicant to provide a legal memorandum or opinion from its U.S.-qualified outside counsel or an acceptable substitute. The memo or opinion should present the factual and legal basis for its conclusion that (a) the Candidate Token is not a security under applicable securities laws, and (b) that trades of the Candidate Tokens would not be subject to regulation under any applicable laws applicable to trading of commodities.”
With the SEC currently disrupting crypto markets with targeted subpoenas directed at specific ICOs, Bittrex’s response to the SEC’s announcement is a positive move that will eliminate some of the uncertainty regarding the trade of digital assets on their platform and contribute to the development of a secure, fully-regulated environment for blockchain innovation in future.
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