In the U.S. Securities and Exchange Commission’s (SEC) latest annual report, the regulatory authority explained that reducing the number of cryptocurrency-related scams is currently among their top priorities. The report specifically cites initial coin offerings (ICOs) as one such sector of the industry that they are focusing on.

The report comes amidst an exponential increase in crypto-related scams that has resulted from increased public interest and the complex nature of the industry that leads many neophyte investors to fall prey to savvy scams.

In a section of the report titled “Focus on the Main Street Investor,” the agency explains that their main goal is to protect traditional retail investors from falling prey to complex scams that specifically target their lack of technological knowledge.

Naturally, the cryptocurrency industry is one such industry that has a problem with scams due to its unregulated nature, and the SEC states that they are launching multiple initiatives with partner agencies to reduce fraud in the crypto and DLT sectors.

“Additionally, in partnership with the Division’s Cyber Unit and Microcap Fraud Task Force, as well as the Division of Corporation Finance’s Digital Asset Working Group, the RSTF has launched a lead-generation and referral initiative involving trading suspensions related to companies that purport to be in the cryptocurrency and distributed ledger technology space.”

With regards to ICO-related regulation, they explain that in 2018 alone they have already brought 20 stand-alone cases against ICO companies that have been accused of legal misconduct and/or misleading investors.

“Since the formation of the Cyber Unit at the end of FY 2017, the Division’s focus on cyber-related misconduct has steadily increased. In FY 2018, the Commission brought 20 stand alone cases, including those cases involving ICOs and digital assets. At the end of the fiscal year, the Division had more than 225 cyber-related investigations ongoing.”

As for their strategy to reduce fraud and misconduct in the nascent markets, they say that they have focused on increasing the public’s alertness to the amount of fraud, prosecuting cases to the full extent of the law, requiring that issuers have the proper broker-dealer licensing to offer tokens, and by holding platforms accountable for the quality of the tokens being offered.

Despite the SEC being keen on reducing fraud, they have yet to lay out a formal regulatory framework that focuses specifically on cryptocurrencies and ICOs, rather than using existing laws that are geared towards traditional investments.

Thailand’s main regulatory agency (also called the SEC) is one example of an agency that is regulating the markets through the use of specific frameworks that are designed to help the markets progress while still reducing fraud and misconduct.

The Thai SEC states that, with regard to ICOs, funding must be done through approved venues and that token issuers must receive licensing from the government:

“ICO fundraising needs to be done through an ICO portal approved by the SEC. The ICO acceptance criteria may include due diligence and screening of funders from dishonest people. The source code of the smart contract will automatically be enforced against the contract. After the sale, the SEC publishes a copy of the statement on the SEC website.”

There are currently no signs as to whether or not the U.S. SEC will eventually release a similar framework that is designed specifically with cryptocurrencies and token offerings in mind, but until then it is likely that accusations of fraud and misconduct will continue growing.

The post SEC Report: Reducing Cryptocurrency Scams Among Their Top Priorities appeared first on NewsBTC.

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