TheSEC has recently charged the EtherDelta creator With managing an unregistered exchange. He also settled and EtherDelta is running and up. But this affirms DEXs will need to document with the SEC. SEE: SEC Charges EtherDelta Founder With Operating an Unregistered Exchange. [1 ]
What does this mean (within my arm chair remark; I’m not a legal expert)?
It means anybody conducting a DEX that works at the US, notably a DEX that imitates a conventional market such as EtherDelta or permits ICO exemptions to be traded, should file with the SEC to enroll within a market or ask an exemption.
DEX deals can be a tricky thing, and it’s more tricky when these cope with ICOs. Afterall, if ICOs may possibly be probably are securities, then afterward a few DEXs may possibly be securities trades, and in a few scenarios that a DEX which doesn’t obtain right with the SEC is actually an unregistered securities exchange dealing in unregistered securities (not a good look; sort of thing that is going to cost you $400k if we take the EtherDelta founder’s case as an example of what happens).
This isn’t the close of earth, EtherDelta didn’t obtain shut down, DEXs didn’t obtain prohibited, also it could possibly be the DEXs that overlook ‘t mimic exchanges (and instead for example just host contracts that allow direct swaps) won’t have exactly the equal troubles.
This will be to saytruly decentralized trades which overlook ‘t mimic exchanges could still be safe (I don’t understand, however I really do think there’s a gap medially an immediate swap by means of a contract and an entire exchange using an arrangement publication ), however it’s pretty apparent that the more DEXs should register with the SEC. Maybe becoming right will signify after a few basicKnow Your Customer (KYC) rules, maybe it won’t, but it will slightly mean avoiding large fines and SEC press releases.
The reality is we are in a confusing time to be running a crypto project in general, but especially one that touches ICOs. Crypto is generally being adopted and regulated, but with that comes some requirements and some unclear rules.
Thing is, for all the unclear rules, there is one clear decree… and that is found in the “2017 DAO Reportthat concluded that particular virtual shares, such as for example DAO exemptions, were securities and also platforms which offered trading of those electronic share securities are at the mercy of this SEC’s condition that markets enroll or operate pursuant to an exemption. “
The moral of the story being, even if you operate a pure DEX, you should probably register or request an exemption.
NOTE: “The SEC haspreviously attracted police actionsrelating to un-registered broker-dealers and un-registered ICOs, for example a few of the exemptions traded EtherDelta. ” This is a hint that operating an exchange that is trading tokens of ICOs which the SEC is already going after is a bad move.
What does this say about Ethereum or users?From what I understand there is no specific negative implications here for Ethereum, people who use tokens / DEXs, or DEXs that do file. This is about people running DEX exchanges not following rules laid out by the SEC. Ultimately a DEX is hosted on servers by humans and those humans can make choices like “which simplifies to record or not list. ” From that perspective they are running a type of exchange, and thus it is up to them to follow rules. This doesn’t need a lot of to accomplish with customers with the os that the contracts or tokens run-on (in cases like this Ethereum). Or slightly this is my own understanding. Like, we all overlook ‘t blame Linux for malware or AT&T for spam phone calls.