On Wednesday, the Securities and Exchange Commission made a list of thirteen questions an investor must ask himself before buying or selling cryptocurrency-related products on an online platform.
SEC regulator warned investors that wrong answers to these questions signified that the platform shouldn’t be trusted because it may be illegal, since it is not approved by the SEC.
- Do you trade securities on this platform? If so, is the platform registered as a national securities exchange?
- Does the platform operate as an Alternative Trading System? If so, is the ATS registered as a broker-dealer and has it filed a Form ATS with the SEC?
- Is there information in FINRA’s BrokerCheck ® about any individuals or firms operating the platform?
- How does the platform select digital assets for trading?
- Who can trade on the platform?
- What are the trading protocols?
- How are prices set on the platform?
- Are platform users treated equally?
- What are the platform’s fees?
- How does the platform safeguard users’ trading and personally identifying information?
- What are the platform’s protections against cybersecurity threats, such as hacking or intrusions?
- What other services does the platform provide? Is the platform registered with the SEC for these services?
- Does the platform hold users’ assets? If so, how are these assets safeguarded?
The Commission’s Enforcement Division and Division of Trading and Markets mentioned in a joint release, “To get the protections offered by the federal securities laws and SEC oversight when trading digital assets that are securities, investors should use a platform or entity registered with the SEC, such as a national securities exchange, ATS, or broker-dealer.”