Why is The SEC Reluctant To Register Cryptocurrency As Securities?

Long before the dollar became the routine form of currency people used to exchange property as payment for goods and services. When the dollar was developed you used to be able to redeem for silver and gold, but now federal notes have become the real value object redeemable in our electronic transactions. Cryptocurrency is looking to take this one step further by making the digital currency market linked to real property, or at least the PAX coin is.

The digital currency market is developing to circumvent the unpredictability of the foreign exchange market. Investors are examining the economic fundamentals of cryptocurrency and are assessing which of the current choices will be stable, long term winners. The PAX coin may be becoming the front runner in the race and just might have the right formula to beat bitcoin out. This assessment is vital to see whether the currency is a worthwhile investment but also if the currency is secure. Currently, most cryptocurrencies are backed by nothing but technology which it itself is still being developed.

On March 6th, 2018, the Praetorian Group, a “Cryptocurrency Real Estate Investment Vehicle” also known as CREIV, filed with the U.S. Securities and Exchange Commission (SEC) to register their $75 million Initial Coin Offering (ICO) as a security for the PAX Coin. CREIV was developed by two attorneys who realized the lack of a value proposition that Bitcoin had and looked to develop a stronger cryptocurrency that was backed by real value. The fear is that there could be a cryptocurrency crash, but the benefit of the PAX token is that it is built on a foundation of real asset through real estate properties allowing it to survive changing market conditions.

However, the SEC still holds concerns about the security of cryptocurrency and that there are still significant investor protection issues that still make the SEC reluctant to register cryptocurrencies. There are five main areas of concern that the agency holds: valuation, liquidity, custody, arbitrage and potential manipulation. For organizations like CREIV, they must find a way to identify and address these issues for the SEC to find merit in registering cryptocurrency as securities. They also do not believe that fund sponsors initiating registration of funds intended for investment is appropriate and have requested sponsors who have registered statements for such products to withdraw them.

This was sparked by firms seeking to list cryptocurrency-related exchange-traded funds with the SEC. Some companies have listened to the SEC’s request and have withdrawn their filings due to the concerns over valuation and liquidity. Bit-coin tied products proposed by Bitcoin investors was also rejected by the SEC in 2017. CREIV may have better luck filing with the SEC if they are able to address the concerns presented to them and it seems that they may be well on their way. By tying their currency with real value through their residential properties they are giving PAX Coin more security.As they say it’s all about location, location, location and PAX coin might just have the real value that the SEC is looking for.

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