Investors in cryptocurrencies face challenges as the market for virtual coins isn’t as carefully regulated as the market for trading in many other types of assets. Working with a cryptocurrency lawyer is advisable to ensure that your rights are protected and that you make sure your investment dollars are as safe as possible when buying Bitcoin or other virtual currencies.
While regulations for cryptocurrencies are still evolving, the Securities and Exchange Commission (SEC) is clearly moving to take a more proactive role in policing investment offerings in the cryptocurrency marketplace. In fact, as CNBC reported, the SEC appointed a new leader of an emerging cryptocurrency division in June of this year.
New Leader Appointed to Cryptocurrency Division of SEC
According to CNBC, Valerie Szczepanik has been named as the new senior advisor for digital assets and innovation and will head up the SEC’s cryptocurrency division. She first joined the SEC back in 1997 and will now be in charge of coordinating how all SEC offices and divisions respond to the growth and development of the cryptocurrency market. In particular, one of her key roles will be to coordinate efforts related to regulating Initial Coin Offerings (ICOs) and other cryptocurrency trades.
The cryptocurrency market has already become a multi-billion dollar market with minimal oversight, raising the potential for substantial investor losses due to scams and fraud. The SEC has declared that while cryptocurrencies are not considered securities under the traditional definition, Initial Coin Offerings (ICOs) are to be treated as securities even though cryptocurrency companies believe that cryptocurrencies should be treated differently.
The SEC has begun issuing warnings to consumers about scam risks, and now with the development of a cryptocurrency division under the guidance of Szczepanik, it is possible the agency will begin to develop tighter rules and regulations as well as cracking down more on those who are in violation of SEC rules for securities trading.
The involvement of the SEC and the creation of a new cryptocurrency division by the agency could potentially result in more investors in virtual currencies, and particularly more international investors. If these new investors come into the crypto market and begin trading, this could help to increase liquidity and it could raise prices, which have fallen in 2018 after a dramatic increase of 1,300 percent in 2017.
Many experts believe that foreign investors are eager to begin trading within the virtual currency marketplace but are waiting for additional guidance from regulators. The SEC’s new division and the announcement of the new head of that division could help to spur investors who are confident that new regulations will be forthcoming.
It is important for all investors in Bitcoin and other virtual currencies to understand changes in the regulatory environment so they can make the most informed choices about how they are affected. A cryptocurrency lawyer can provide insight into new legal developments that could impact investments.