The US Securities and Exchange Commission (SEC) has a goal of protecting users of Blockchain technology from unstable platforms. The federal institution is also aiming to protect investors of Cryptocurrencies from fraudulent Tokens. Therefore, the SEC is launching the first of a kind crackdown on scams in order to remove them from Crypto exchange listings where unsuspecting investors fall prey to them. Part of the effort will also be directed to investigate initial coin offerings that fraudsters issue for phone startups.
Security And Fraud Are Major Concerns To Cryptocurrency Communities
There are several ways of owning Cryptocurrencies. They include initial coin offerings buying, securities token offerings participation, Cryptocurrency mining on Blockchain platforms, trading in Digital Assets in Cryptocurrency exchanges, accepting Digital Assets in exchange of goods and services in points of sale, exchanging data in Blockchain networks, just to mention but a few. Crypto enthusiasts and investors have long been suffering immense losses from bad actors. This has created market jitters that often delay investments decisions and also slowed down the momentum of investor participation/activity in Crypto markets.
Two years ago, a crackdown on scams by the US SEC merely made news headlines, but this has changed a lot in 2018 following a growing interest in Cryptocurrencies and Blockchain technology solutions.
Fraudulent ICOs And Blockchain Platforms Will Be Taken Down
ICOs are very popular despite the risk that they pose. Blockchain startups have been able to raise millions of dollars as capital to fund fintech projects that are disrupting the world. However, a report from the SEC shows that the vast majority of these ICOs lack established track records or viable product. The lack of track records is an inherent aspect of these crowdfunding schemes since most of these projects are simply an intention of ideas by individuals who are usually the average individual with a good business idea. Secondly, the lack of viable products opens the investments to risks that may often end up plunging investors into massive losses.
Most importantly, some ICOs may have good ideas but the team may be planning to take the money from investors and go underground.
Additionally, some ICOs may not have sufficient security features. This exposes Digital Assets in individual wallets to theft by hackers who may successfully breach online wallets to the detriment of users.
The US SEC will ensure that all ICOs adhere to set standards that will be beneficial to all users since it will be serving the interests of investors, genuine ICO providers, and startup Blockchain businesses.
The SEC Actions Will Restore Confidence In Cryptocurrencies
The lack of regulation is the single major factor that has been enabling fraud in the Digital Assets market. Positive regulation will therefore not stifle growth but embolden more skeptical investors to place their money in Crypto Assets.
In 2018 alone, the Crypto market has been on a prolonged bear run with few signs that a break out to a bull run is around the corner. A crackdown on scams in the market will play a critical role in increasing market momentum both in the short-term and in the long run.