The US SEC urges companies to account for crypto-related risks and they should clarify the essence of their activities and disclose the risks to the user as the regulator added so let’s find out more on today’s latest cryptocurrency news.
The US SEC urges companies that provide crypto services to account for all crypto-related risks that come from the operations to the clients. The agency warned investors to be cautious when delving into the asset class because they can get into a huge financial loss. The US Sec issued guidance to a wide range of entities such as crypto-related companies and explain in detail the essence of the operations but also reveal the potential risks to the customers. The regulator also reminded us that there’s no standard for protecting digital assets and as such, they should be considered a liability.
The organizations should also disclose the nature and the amount of crypto that they are responsible for holding. The SEC alerted inexperienced investors about the risks in the industry but noted that the companies have to explain to clients that they could lose their funds at any time:
“The technological mechanisms supporting how crypto assets are issued, held, or transferred, as wells as legal uncertainties regarding holding crypto assets for others, create significantly increased risks… including an increased risk of financial loss.”
The security of the entities has already been breached in the past few months and resulted in the loss for the users with hackers attacking Crypto.com and draining $34 million worth of crypto. Earlier this week we saw the attack on the Ronin Network that exploited the platform out $625 million however in both cases, the victims were reimbursed. Despite the plans not to ban crypto in the US, the SEC is quite keen on applying regulations in the industry.
Gary Gensler, the SEC chair opined that the watchdogs should supervise the exchanges and such an initiative can happen in 2022 to provide the investors with more protection when dealing with cryptocurrencies:
“I’ve asked staff to look at every way to get these platforms inside the investor protection remit. If the trading platforms don’t come into the regulated space, it’d be another year of the public being vulnerable.”
Gensler even noted that after Biden’s singing of the first executive order on crypto, he looks forward to working with colleagues in the government and creating a better environment for the sector. He also pointed out the protection of customers and protection against illicit activities.
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