SEC Swears To Enforce Improved Surveillance on Alternative Trading Systems
It appears that cryptocurrency exchanges are showing greater interests in getting licenses for alternative trading systems (ATS). This has driven the United States Securities and Exchange Commission (SEC) to swear that it will do whatever it can to improve the requirements of transparency and surveillance. This would mean that the regulator will adopt amendments to the regulatory guidelines of the ATS. These efforts are meant to have solid control over the manner in which such digital currency exchanges are operating.
The SEC indicated that its guidelines would allow it to have an effective mechanism to monitor the trading platforms of the virtual asset exchanges, ccn.com reported. This included securities listed on national exchange though they would not have registered as exchanges for cryptocurrencies. Incidentally, it was only a few days ago the San Francisco-based Coinbase announced the acquisition of three firms having different licenses. One among them is Venovate Marketplace that was seen as an ATS license holder.
Jay Clayton, chairman of the SEC, said in a statement, “I applaud the staff’s retrospective review of our regulation of ATSs. I agree that promoting greater transparency in order interaction, matching, and execution will help empower investors and their intermediaries to find those trading venues that best meet their trading and investing objectives.” However, digital currencies did not find a place in the amendments. Though the regulator proposed the amendments three years ago, the approval timing is a significant one.
That is because it comes during a period where there are more digital currency firms trying to get ATS licenses. Obviously, their objective is to list the initial coin offering (ICO) coins apart from other virtual assets that are classified as securities. This would ensure that they are doing business in accordance with the federal laws on trading of securities. Interestingly, Circle told the regulator about its intention to get a license for ATS.
Early this year, Circle has acquired Poloniex, a digital coin exchange. The company’s officials have confirmed in public that the company could get a license for a trading and broking business from the SEC. Aside from that, Overstock, an e-commerce firm, is having an ATS through an earlier acquisition. As a result, it enables tZero, one of its portfolio firms, to create an exchange for the security token.
In the past too, the SEC Chairman has issued warning especially about ICO tokens since he felt that most of them were securities. Therefore, he warned of enforcement actions if any of the trading platforms listed them without any authorization from the regulator. The SEC is also not showing enough courage to provide its permission for the exchange-traded funds (ETF) fearing risk associated with it for retail investors.
The amended guidelines for ATS could become effective 60 days after Federal Register publishes it. It will be in full force by February next year. However, some additional disclosures would be required in certain cases, especially in respect of possible conflict of interest. The regulator will enjoy the power of reviewing the new public filing.