Though the crypto market has struggled in 2018, regulators did their best in order to bring regulatory clarity in the industry. In the last 11 months, the market has slowly transformed from Wild West to become mature enough to attract the likes of Goldman Sachs.
The Securities and Exchange Commission over the last months made progress for the crypto market. The agency, this year considered Bitcoin and Ethereum as commodities. In addition to this, it has rejected Bitcoin ETF applications including that of Cameron and Tyler Winklevoss.
Now, it is clear that part of the agency’s agenda is to bring regulatory clarity within the market. The agency took another step towards this. This time around, it focused its attention on investment advisors.
It has been reported that the Securities and Exchange Commission is now investigating on advisers that have links to cryptocurrencies. For those fund managers that are in charge of $100 million or more are going to be targeted by the agency’s scrutiny.
The agency is interested in different aspects of the crypto industry. For instance, it wants to know more about the possibility of price manipulation, cyber-security issues, as well as how cryptocurrencies are stored. All of these issues are now pertinent to the industry.
The Agency Learning From the Crypto Market?
In the last year and a half, according to a study, more than $800 million were lost because of hacking. For instance, you have Coincheck that lost around $500 million worth of cryptocurrencies. And also, there is even the potential involvement of North Korean hackers.
This can be considered a new approach taken by the SEC. In the past, it was mainly concerned whether or not a token is a security. It was also busy shutting down initial coin offerings (ICOs) that were fraudulent. In September, the agency decided that 1pool was selling unregistered securities and also TokenLot.
Also, early in 2018, the agency even sent subpoenas to different cryptocurrency exchanges in order to collect information from their end.
Increasing Demand for Cryptos
There is an increase in the demand for cryptos. You even have the likes of ICE joining forces with Microsoft to have Bakkt. In addition to this, you have Fidelity that created their own company centered towards custodial services. In June, there was a research that discovered 212 hedge funds were created focusing on cryptos.
And because of these developments, it is clear that there should be regulatory certainty in order to ensure that investors can make money with peace of mind. Gail Bernstein from Investment Adviser Association mentioned that “Typically, after a sweep of this type, the SEC staff will publish its findings and observations, and that can provide very helpful guidance for advisers as they consider their compliance obligations”.
Regulatory clarity is a problem that has affected the industry. Though Bitcoin skyrocketed in 2017 to near $20K, the crypto market’s lack of regulations made it a Wild West for investors. This is also the reason why institutional investors are still not yet fully involved. However, given the price movement of Bitcoin today, there are those who believe that many are holding on to their Bitcoin waiting for regulatory clarity. Bitcoin price has been in $6,200 to $6,500 range over the past weeks, and it has become less volatile than Netflix and Amazon stocks.