The Securities and Exchange Commission (SEC) has decided to add at least 20 more enforcement positions dedicated to the crypto industry, making the total enforcement staff focused on virtual assets to 50. This change could mean more worries for asset exchanges as the SEC is reconsidering and broadening what it regards as ‘securities’. Experts tracking these developments believe that the SEC will increase its scrutiny to look into start-up ventures violating the regulations. Many things will come under the direct scrutiny of the SEC, including stablecoins, NFTs (non-fungible tokens), and platforms that trade virtual currencies as securities. Some experts like the partner at Akin Gump Strauss Hauer & Feld LLP Ian McGinley say that they expect greater monitoring of decentralized finance platforms (or DeFi). DeFi platforms facilitate direct peer-to-peer financial transactions without any intermediaries. The SEC Chief, Gary Gensler is already interested in examining these DeFi platforms. There is also a lot of power concentration in the top DeFi platforms. The top five DeFi platforms control 80% of the total trading.
The SEC has already been doubling its efforts against crypto platforms allowing users to lend and borrow assets and provide interest payments. Recently, the SEC filed a case against BlockFi, a crypto lending platform. BlockFi charged a variable interest rate for lending crypto assets on its platform, a practice that falls under the ambit of the SEC’s securities laws. The platform had to pay $100 million in damages to settle these charges of not taking appropriate measures to register their securities. Additionally, BlockFi agreed to register all its securities in the future.
NFTs
The SEC also expects to pursue cases against the latest development in digital assets, called NFTs. In the case of NFTs, the buyers purchase the distributed ledger on which an NFT exists. NFT owners do not always own the original assets; they have unique ownership over their digital marker. Besides art, NFTs can be used for representing digital markers for other items like company shares or used as currency in video games. The SEC will likely increase its scrutiny over NFTs since it’s taking measures against some NFT projects for selling non-registered securities. The states of Alabama and…
