SEC Increases Regulation of the Crypto Assets Sector

Recently, with Facebook launching the Libra project, U.S. regulatory agencies have significantly increased their attention on Crypto Assets. The Securities and Exchange Commission (SEC) and other departments have frequently held hearings and intensified accusations and penalties against related companies.

On September 24, the U.S. Congress held a hearing on the regulatory issues surrounding Crypto Assets and Libra, themed "SEC Regulation: Wall Street's Watchdog." SEC Chairman Jay Clayton stated that ICO regulation remains a challenge, as the existing Securities Act does not fully address the issues. The SEC's current approach to regulation still prioritizes investor protection while seeking broader and more effective regulatory avenues.

SEC Commissioner Jackson believes that the SEC's existing rules have fallen behind the development pace of the Crypto Assets industry and that adjustments should be made in the future to encourage the development of Crypto Assets and enhance industry transparency.

In fact, an increasing number of ICO projects are being targeted by the SEC, with fines and charges appearing frequently. Since August, the SEC has filed lawsuits against multiple companies involved in ICO projects, digital asset exchanges, blockchain technology companies, rating companies, and more. The publicly disclosed penalties range from $260,000 to $10.24 million.

The following are the 6 major charges filed by the SEC in the Crypto Assets sector since August:

On August 12, the SEC filed a lawsuit against Reginald Middleton and his two companies, accusing them of fraud and unregistered ICOs, and froze approximately $15 million in related assets.

2. On August 12, the SEC filed a lawsuit against the blockchain company SimplyVital Health, Inc. for issuing unregistered securities, demanding the return of approximately $6.3 million in raised funds.

3. On August 20, the SEC fined the crypto assets analysis company ICO Rating $260,000 for failing to disclose the payments received from projects that were given positive ratings.

4. On August 29, the SEC filed a lawsuit against Bitqyck Inc. and its founders, accusing them of deceiving investors through the issuance of securities and operating an unregistered exchange. The penalties include the return of $13 million raised and a fine of $10.24 million.

5. On September 18, the SEC sued ICOBox and its founder Nikolay Evdokimov, accusing them of engaging in illegal securities issuance activities as unregistered brokers.

6. On September 23, the SEC accused Jonathan Lucas, CEO of the online adult entertainment platform Fantasy Market, of manipulating a fraudulent ICO scheme in 2017.

Despite the SEC's increased regulatory efforts against illegal financing, it is also trying to open more compliant channels. In July of this year, the SEC approved blockchain startups BlockStack and Props to publicly issue digital currencies through RegA+. According to statistics, as of October 2018, the SEC has approved 39 STO projects and 2 ICO projects.

As the application scope of Crypto Assets expands, global regulatory agencies are becoming increasingly cautious about this field. Especially after Facebook announced the Libra project, countries are paying more attention to the potential impact of digital currencies on the financial system, hastening their regulatory arrangements for Crypto Assets.

Crypto assets, as a new type of investment method that coexists with risks and returns, have a regulatory approach that differs from traditional securities and payment systems. Since the birth of Bitcoin in 2008, the development of the crypto industry is still in its early stages, and the relevant regulations are still being explored and improved.