The USA SEC has decentralized exchanges under its watchful gaze. At least according to declarations made by Robert Cohen. Cohen is the chief of the cyber division of the SEC. He declared that no exchange is away from SEC’s jurisdiction. As tech advances, also regulatory institutions are moving forward.
Decentralized Exchanges Spotted
Decentralized exchanges could be the next ones to feel the heat of regulation. Robert Cohen, chief of the cybersecurity team of the SEC has made statements that seem to point in this direction. The SEC must bear a great responsibility taming the cryptocurrency issue. However, they have stepped up to the game.
The division of enforcement of the SEC released an annual performance report where there is a great deal of material about cryptocurrencies and ICO’s. So it is natural that their reach could extend to even noncentralized institutions like coded exchanges. ICO’s comprise a big part of the cases quoted in the report.
In this sense, Cohen declares that the form of the institution is of no relevance to them. He stated:
“The focus is not on the label you put on something or the technology you’re using. The focus is on the function, and what the platform is doing. Whether it’s decentralized or not, whether it’s on a smart contract or not, what matters is it’s an exchange.”
so it is clear that decentralized or not, exchanges cannot break the law freely.
The Decentralized Exchanges Affair
But decentralized exchanges are nothing more than active smart contracts running continuously. They have no physical footprint or personnel, at least not as Binance or Coinbase. So there are no owners to judge or fine.
The SEC’s approach to this kind of exchange has been to charge the author of the smart contract with the fines of the exchange. A controversial move, but one that will surely scare off low-level exchanges from breaking the law. And this is not just barking from them.
Earlier this week, the creator of the smart contract of the decentralized exchange EthereDelta was fined with more than $300K by operating an unregistered exchange. So they are clearly serious about this set of measures.
Regulation and Clarification Needed
The problem is that cryptocurrency regulation is not already clear, and there is no sufficient clarity about how to proceed to avoid being fined. ICO’s are also part of the problem here, with the SEC resolving claims with a case by case approach.
So, it is likely that, by the declarations of Cohen, more decentralized exchanges will get fines in the coming weeks.