SEC Urges Investors to Be Cautious With Crypto Securities

The warning comes one day after Coinbase disclosed the receipt of a Wells Notice from the U.S. securities regulator.

AccessTimeIconMar 23, 2023 at 4:05 p.m. UTC
Updated Mar 24, 2023 at 2:34 p.m. UTC

The U.S. Securities and Exchange Commission (SEC) has urged investors to exercise caution when investing in crypto asset securities.

The agency's Office of Investors Education and Advocacy warned the platforms offering crypto trading may not be complying with federal securities statutes.

"The law requires parties such as securities broker-dealers, investment advisers and exchanges to register with the SEC, a state regulator, and/or a self-regulatory organization," the SEC said in a bulletin on Thursday. "Moreover, entities and platforms involved in lending or staking crypto assets may be subject to the federal securities laws."

The SEC has previously attempted to demonstrate that many crypto exchanges are operating as unregistered securities exchanges in the U.S. SEC Chair Gary Gensler has frequently voiced this view.

The regulator's warning comes the day after Coinbase (COIN) disclosed the SEC issued it a Wells Notice indicating a possible imminent enforcement action tied to the exchange listing of potentially unregistered securities. Coinbase's Nasdaq-listed shares were hit hard by this news, slumping as much as 20% in early trading on Thursday. At the time of writing, they are have recovered around half of their losses, down 10% at $69.32.

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Jamie Crawley

Jamie Crawley is a CoinDesk news reporter based in London.


Learn more about Consensus 2024, CoinDesk’s longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.