The golden era of scammy cryptocurrency exchanges could soon be drawing to a close. On Wednesday, the Securities and Exchange Commission denounced the initial coin offerings (ICOs) of altcoins in a public statement, calling them “fraudulent and manipulative.”
“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not,” says the statement. “Many platforms refer to themselves as ‘exchanges,’ which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”
To anyone outside the cryptocurrency bubble, this isn’t exactly news. Bitcoin FOMO and the near-omnipresence of get-rich-quick scams has led to a boom of wannabe cryptocurrency investors. And despite the fact that none of them seem to be getting rich — and that even Bitcoin itself appears to be tanking — the exchanges only continue to grow.
But the SEC’s announcement could possibly herald a turning point. The statement hinted at legitimate regulatory action could be coming soon: “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 goes on to question the legitimacy of practically every aspect of the cryptocurrency market from the pricing structures employed, to the quality of the assets (read: shitty altcoins), even their right to refer to themselves as “exchanges.” If the SEC does actually decide to follow through on this and punish those that fail to comply with federal regulations, it could have a seriously chilling effect on altcoin pump and dumpers, mystery box scammers, and, of course, the ever-fruitful Dogecoin market.