SEC Director “Underwhelmed” by Rate of Crypto Exchanges Self-Reporting

  • The SEC has been keen to stress that ICOs are securities and must thus be registered with the agency.
  • Despite this emphasis on the importance of proper regulation, SEC Director Brett Redfearn has revealed a distinct lack of self-reporting amongst crypto exchanges.

The Securities and Exchange Commission (SEC) has gone to great lengths in the past months to emphasise that ICOs must categorically be viewed as securities, and that exchanges which trade the assets must thus register themselves with the agency.

Despite this stress on proper regulation, however, one director has spoken out about his surprise with regards to the lack of self-reporting taking place. Brett Redfearn, who is employed by the division of trading and markets, revealed to CNBC:

“We’re underwhelmed by the enthusiasm for coming within the regulatory structure right now.”

Brett Redfearn

Speaking at the Sandler O’Neill Global Exchange and Brokerage Conference on Wednesday, the director added that:

“There are a number of exchanges that are trading ICOs [so] I would think that we would see more registrations.”

Brett Redfearn

SEC Commissioner Jay Clayton has also been vocal on the subject, making it clear that ICOs must necessarily be classified as securities. He said to CNBC:

“We regulate the offering of that security and regulate the trading of that security.”

Jay Clayton

The categorisation of an asset as a security is determined by a form of grading known as the ‘Howey Test’, which is taken from a 1946 ruling by the Supreme Court. This makes it clear that any investment of money in a common enterprise in which the investor expects to profit from another’s effort must always be viewed as such.

As Redfearn explains:

“We’ve created this pronged test, the Howey Test, where people look at the different characteristics and determine if it’s a security. Quite frankly not all of them are obvious on its face exactly what it is.”

Brett Redfearn

Redfearn declined to comment on whether popular digital currencies like ethereum and XRP belonged to the same classification, saying instead that there would be statements on “at least one of those products forthcoming in the future.”

Featured image from Max Pixel

Jimmy Song Questions Buterin's Claims Regarding Ethereum's Progress

Prominent Bitcoin (BTC) developer Jimmy Song recently questioned Vitalik Buterin’s claims that the Ethereum (ETH) project made the “research breakthroughs” required in order to launch the set of upgrades associated with Ethereum 2.0.

Recently, the Ethereum Foundation, a non-profit organization focused on supporting the ongoing development of Ethereum, the world’s largest smart contract-enabled platform for deploying decentralized applications (dApps), revealed its plans regarding how it intends to spend the allocated $30 million to support the ETH ecosystem.

“Can Money Buy Scientific Breakthroughs?”

In response to the Foundation’s report, well-known crypto influencer Tuur Demeester stated via Twitter:

Responding to Demeester’s comments, Buterin explained that adequate research had already been carried out in order to successfully transition from Ethereum’s current proof-of-work (PoW)-based consensus model to proof-of-stake (PoS). The Russian-Canadian programmer also mentioned that the blockchain network’s developers carefully drafted the specifications for the major upcoming Ethereum 2.0 upgrade.

Promising Innovation For Years, Not Delivering

However, blockchain educator Song claimed that Ethereum’s developers had been promising innovation for the past five years. The University of Michigan computer science graduate added that it would be quite challenging to implement, or code, the research and specifications for Ethereum.

In May 2018, renowned economist Dr. Nouriel Roubini, one of the most vocal critics of cryptocurrencies, also argued that Ethereum’s creators had been promising groundbreaking innovations for over five years. Expressing views somewhat similar to Bitcoin developer Song, Roubini said that Ethereum would not be able to scale effectively and that distributed ledger technology (DLT)-based systems would eventually fail.

Roubini, whose comments came during a live debate with Ethereum co-founder Joseph Lubin, also previously accused Buterin of engaging in criminal behavior by “premining” large amounts of ETH.

$500 Million DeFi Ecosystem Built Mostly On Ethereum

However, Buterin clarified that premining was not a crime and that he never held more than 1% of ether’s overall supply at any point. He also revealed his cryptocurrency holdings (at that time) and noted that he no longer holds 1% of the cryptocurrency's circulating supply. Furthermore, he confirmed that at no point did his net worth come close to $1 billion (a claim Roubini made).

Despite the recent criticisms of Ethereum’s ongoing development, there have been a relatively large number of useful dApps launched on the smart contract platform. In fact, nearly the entire half a billion dollar decentralized finance (DeFi) ecosystem has been created on Ethereum’s technological infrastructure.

Notably, Uniswap, an Ethereum-based peer-to-peer (P2P) exchange protocol, recently processed over $20 million in trades and contracts in the past week. This, only after being launched just six months ago.