Former SEC Chairman Warns of Regulatory Crackdown for Cryptocurrencies

It’s a well-known secret that the Securities and Exchange Commission has been cracking down on initial coin offerings. These developments took some people by surprise, as they had assumed cryptocurrencies in general would face additional scrutiny as well. So far, that has not happened, although it seems to be only a matter of time until this situation changes. Former SEC chairman Harvey Pitt claims we can expect “major regulatory responses” as early as 2018.

What Does the SEC Have in Store for Bitcoin?

We have seen a fair few interesting cryptocurrency-related trends in 2017. The rejection of Bitcoin ETFs was a big blow to the community, although it never impacted the trajectory of the Bitcoin price whatsoever. In fact, it may have unintentionally allowed the value of the world’s leading cryptocurrency to soar to new heights. There’s also the ICO crackdown by the SEC to take into account. This method of raising funds from non-accredited investors cannot be allowed without proper supervision, it seems.

At the same time, people have been wondering when we would see regulation that applied to cryptocurrencies. That hasn’t happened so far, even though several US states have introduced their own guidelines and licensing requirements for service providers. At a higher level, the SEC has remained virtually silent when it comes to cryptocurrencies, although it dislikes the lack of actual cryptocurrency regulation as well. Someone will have to make the tough decisions in this regard, yet it remains unclear who that may be in the end.

If former SEC Chairman Harvey Pitt is to be believed, the lack of cryptocurrency regulation won’t be a hindrance for much longer. In fact, the SEC will, in his opinion, continue to crack down on suspicious cryptocurrency activity. This means the government agency may ultimately come up with cryptocurrency-wide regulation as well, although nothing of the sort has been officially confirmed. Pitt claims the regulatory response by the SEC will become apparent “soon”, possibly as early as January.

With so many people investing in cryptocurrency and the media paying more attention to it now than ever before, it is evident something will need to change. There is no real education on cryptocurrency and the potential risks such investments entail. At the same time, most people who invest in traditional vehicles don’t know those risks either, let alone what those products entail. Cryptocurrencies are very different from those other investment types, mainly because they are not issued or controlled by a central bank or government.

It seems Harvey Pitt is concerned about ICOs more so than actual cryptocurrencies, though. Since most ICO projects issue tokens as securities without adhering to legal guidelines, they are the biggest problem to tackle right now. Cryptocurrencies themselves are not without risk, but it has become a lot easier to cull the wheat from the chaff. At the same time, the current top 25 cryptos ranked by market capitalization still contain a few projects which raise more questions than answers. Cracking down on such creations will be extremely difficult, even for the SEC.

For the time being, it remains unclear what the SEC has planned for the cryptocurrency industry as a whole. Any sort of regulation will further legitimize this industry, which can only be considered a good thing. The big question is what we will have to give up in exchange for the “legalization” of cryptocurrencies. In most cases, the US government doesn’t take kindly to innovative forms of money, especially ones it can’t control.