The Securities and Exchange Commission fired a warning shot at the cryptocurrency industry when it filed an insider trading case that declared several digital assets qualify as securities, according to those closely following the agency.
The SEC last month charged a former Coinbase Global Inc. manager with tipping off others about which tokens were going to be listed for trading on the exchange, allowing them to profit when the listing boosted the prices. But what caught the attention of many stakeholders was the agency’s determination that nine of the 25 cryptocurrencies involved were securities, and therefore under its jurisdiction.
It seems inevitable that issuers of those tokens will soon find themselves on the receiving end of a civil complaint from the SEC, said Lee Reiners, executive director of the Global Financial Markets Center at Duke University, in an interview. Some unknown number of the estimated 19,000 types of cryptocurrencies now circulating could also be implicated.
