During the last year, many new cryptocurrency hedge funds started to invest in cryptocurrencies. That’s why, the US Securities and Exchange Commission (SEC) is preparing to examine up to 100 crypto-related hedge funds. The information was revealed to the Wall Street Journal (WSJ) on march the 22nd by a person familiar with the matter.
Cryptocurrency Hedge Funds Controlled
The main intention is to start to regulate a market that is out of the law, according to US authorities. At the same time, the examiners will be reporting the suspicious activities related to these crypto-hedge funds. Moreover, the source told WSJ that the purpose of the initiative is to inform how the commission should address cryptocurrencies.
Additionally, the SEC will be gathering information about how these crypto-hedge fund work and how to regulate them in a way that will benefit both sides.
“This is a way for the SEC overall to gather information and learn about important new technology and products,” said Marc Elovitz, partner at Schulte Roth & Zabel LLP. “They conduct these typos of operations to educate the commission overall about new businesses or new industries.”
The inspections will start to take place in the next two months, the source tells the WSJ. Examiners will check the assets that the fund managers bought and compare them with what they told investors in disclosure documents.
The source has also commented that the SEC has detected at least 100 private fund managers whose holdings are focused in cryptocurrencies. At least 84 new cryptocurrency hedge funds were launched just in 2017, and the tendency is growing.
On March the 7th, the SEC released a public statement in which they explain that platforms trading digital assets (securities), must be registered with the SEC.
The statement reads as follows:
“The SEC staff has concerns that many online trading platforms appear to investors as SEC-registered and regulated marketplaces when they are not. Many platforms refer to themselves as “exchanges,” which can give the misimpression to investors that they are regulated or meet the regulatory standards of a national securities exchange.”
Crypto International Regulations
The last days, the G-20 finance ministers met in Buenos Aires to discuss possible regulations to cryptocurrencies and blockchain technology. In a document that has been leaked, and later officially released, the G-20 countries propose to follow the Financial Action Task Force on Money Laundering (FATF) standards to regulate cryptocurrencies.
“We acknowledge that technological innovation, including that underlying crypto-assets, has the potential to improve the efficiency and inclusiveness of the financial system and the economy more broadly. Crypto-assets do, however, raise issues with respect to consumer and investor protection, market integrity, tax evasion, money laundering and terrorist financing.”
The intention is to regulate the market, but not kill it with hard and strict regulations. And this is what the SEC is trying to do controlling cryptocurrency hedge funds.
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