I have a few blogs that I am currently developing regarding the emerging legal treatment of blockchain, smart contract, and cryptocurrency technology.  While those are coming soon, an important development took place over the last couple days for those invested or soon investing in cryptocurrencies.  Once relegated to the technical and internet community, Bitcoin and the like have been raised to the mainstream of public consciousness.  Just 24 hours after a U.S. Judge ruled that virtual currencies can be regulated as commodities by the U.S. Commodity Futures Trading Commission, the SEC (Securities and Exchange Commission) has announced that cryptocurrency exchanges (where you buy Bitcoin, Ethereum, Ripple, etc.) will be regulated under federal securities law and require registration.  While there have been many competing theories on how to classify these cryptocurrencies, the SEC seems to be taking the reins and authority over this technology.

In its statement, the SEC said that “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.”

A large part of this decision seems to be that the exchanges look and operate similarly to the traditional Wall Street exchanges.  This move by the SEC may provide more consumer protection to investors looking to get in on the next big boom.  It is too early to tell what actual effect this may have on the cryptocurrency industry; however, this news caused the loss in value of various virtual currencies of around 9%.  It will be very interesting to see which government agency winds up with regulatory power over these “coins”, but it is pretty clear that the days of flying under the radar are at an end.

If you are interested in these types of investment or feel that you have been defrauded in these investments, reach out to an attorney experienced in securities and investments.  Our office offers a free consultation.

Click here to read the full SEC statement

Click here for more information on the ruling in favor of the U.S. Commodity Futures Trading Commission