SEC Issues Statement on Potentially Unlawful Online Platforms for Trading Digital Assets

March 27, 2018

The staff of the Divisions of Enforcement and Trading and Markets (collectively, Staff) of the U.S. Securities and Exchange Commission (SEC) on March 7, 2018 jointly issued a statement on digital asset trading platforms (Statement), which is addressed to investors as well as the market participants operating such platforms. The Statement reiterates that, if a platform “offers trading of digital assets that are securities” and “operates as ‘exchange,’ as defined by the federal securities laws,” the platform must register with the SEC as a national securities exchange or be exempt from registration. The Statement serves as both: (i) an informational guide for investors using online trading platforms; and (ii) a warning to operators of those platforms that the SEC is actively monitoring for potentially fraudulent or manipulative behavior in the market for security tokens, as the SEC has cautioned recently for initial coin offerings (ICOs).

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