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.”

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UK Opens $130,000 Contract to Catch Crypto Tax Evaders

  • The HMRC has opened a contract worth £100,000 for the creation of software that can detect crypto tax evaders.
  • Special preference is being given for tools targeting privacy coins such as Monero.

The United Kingdom has offered a contract worth £100,000 ($130,000) for software that can identify when cryptocurrency is used to avoid paying taxes. 

According to the contract posted by HM Revenue & Customs (HMRC), the organization is seeking a tool that will “support intelligence gathering methods” for identifying and clustering cryptoasset transactions and linking to their service providers.

The contract claims the tool must be capable of tracking bitcoin, bitcoin cash, XRP, USDT, ethereum and ethereum classic. Preferential treatment will be given to developers capable of creating a tool that can analyze private cryptocurrencies, such Monero. 

The contract reads, 

Crypto assets, such as Bitcoin and Ethereum, provide a means to transfer value between interacting parties.  Also known as virtual and crypto currencies, these services are increasingly used for a range of purposes, from international money transfers, sales of digital services, paying staff and tax evasion and money laundering.

HMRC is one of the UK’s largest organizations, with 60,000 full-time equivalent staff working to collect taxes.

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