Coinbase stock drops 20% amid regulatory scrutiny over 'unregistered securities'
Categories: Crypto News US
Coinbase stock drops 20% amid regulatory scrutiny over 'unregistered securities'
Shortly after announcing the first crypto insider trading case, where it identified nine tokens as securities, the US Securities and Exchange Commission (SEC) now launched an investigation into Coinbase, the publicly listed exchange that lists them. Is. What Are Unregistered Securities Anyway?The term "securities" refers to tradable financial assets, and under US securities law a company cannot offer or sell securities to the public unless the offering is registered with the SEC.
Registered offerings are subject to a number of laws and regulations that are intended to protect investors. Full disclosure is one of the core elements required within a public listing, which is designed to help investors make informed choices, and is typical not only in the US but across nearly all capital markets.
Some of the required information to be disclosed includes the history of the company and its founders, shareholding structure, financial statements, executive compensation, risk factors (both current and future), an explanation of management's operations, and any other material facts relevant to the offering.
Coinbase denies listing securities
It also argues that “most of the assets we review are ultimately not listed on Coinbase”. The company's statement criticized the SEC's "enforcement by regulation" approach, and stressed the need for a "solid digital asset securities regulatory framework".
Clearly, regulators are increasing the regulatory pressure and, given that there exist around 20,000 tokens around the world, the most viable mechanism for regulation appears to be with exchanges. Centralized exchanges should undoubtedly expect increased scrutiny in the coming months.