Although the cryptocurrency market is growing faster and new cryptocurrencies and crypto exchanges are growing every day, authorities in some countries are stepping up their efforts to regulate this new asset class and its users.
Trade against the customer
One of them is the US Securities and Exchange Commission (SEC), whose chairman Gary Gensler recently warned the public that some digital asset exchanges may in fact be betting against their own customers, as Bloomberg reported on May 10.
Gensler told Bloomberg News that all cryptocurrency traders fall within the regulator’s remit and must register with him. In addition, he claimed that some of these entities circumvented the rules, traded in front of their customers and:
“In fact, they often trade against their customers because they do market-marking against them.”
The SEC also criticized stablecoins, including tether (USDT), USD coin (USDC) and USD binance (BUSD), for being affiliated with crypto exchanges, allowing them to “potentially avoid AML and KYC” anti-money laundering controls and know your customer.
SEC and its history in relation to cryptocurrencies
The Securities and Exchange Commission (SEC), known for its tough stance on cryptocurrency, is in the midst of several lawsuits against some of the major names in the cryptocurrency and technology industries – including Ripple and Nvidia.
Recall that the SEC has been waging a legal battle against Ripple since December 2020, accusing it of illegally selling more than $ 1.3 billion in unregistered XRP tokens between 2013 and December 2020.
Regulator recently filed charges against technology company NVIDIA Corporation (NASDAQ: NVDA) for failing to disclose the impact that cryptocurrency mining had on profits from its gaming business.
Two months ago, a group of U.S. congressmen wrote a letter to the Securities and Exchange Commission (SEC) fearing the agency’s information-seeking process, which they believe was stifling innovation, especially with regard to crypto startups.
SEC is known for its hardness to cryptocurrencies. Do you feel that the crypto exchange would trade against you?