New SEC Warns Cryptocurrency IRA Investments Could Be Securities

Key Points:

• The SEC warns that crypto investments in individual retirement accounts (IRAs) could be considered unregistered securities.
• According to the SEC, many trading platforms for these crypto-assets refer to themselves as “exchanges,” misleading investors into thinking they are registered.
• The companies argued that the SEC did not provide a realistic route to register the exchange, so electronic assets cannot be considered securities.

The SEC warns investors that electronic investments in individual retirement accounts (IRAs) may be considered unregistered securities.

On Tuesday, the U.S. Securities and Exchange Commission (SEC) warned investors that crypto assets are typically unregistered securities traded on unregistered exchanges. So they should be wary of cryptocurrency’s individual retirement accounts (IRAs).

Self-directed IRAs sometimes offer crypto investments, the SEC said, and those “may be securities that are offered without SEC registration or a valid exemption from registration, and may not be accompanied by complete or accurate information to aid investors in making informed decisions. “

The SEC has warned that many trading platforms offering these crypto assets refer to themselves as “exchanges” which could give investors the illusion that they are registered with the SEC.

However, industry lobbyists and corporate executives often assert that the agency does not provide a realistic route to exchange registration, and they argue that many cryptocurrencies are not securities.

In the SEC’s latest developments on crypto regulation, U.S. broker-dealers, and investment advisors dealing in cryptocurrencies will be scrutinized more closely by Securities and Exchange Commission judges this year, according to the agency’s annual inspection priorities.

Investment firms registered with the SEC that offer or advise on cryptocurrencies will be the focus. The regulator will ensure that the companies “follow their respective standards of care when making their offering” recommend, recommend or provide investment advice.”

SEC Chair Gary Gensler, who has long viewed most cryptocurrencies as being securities that need registration, said these priorities for the examination division aim to protect investors “in a time of growing markets, evolving technologies, and new forms of risk.”

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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