Securities industry regulators continue to issue warnings about cryptocurrencies as the prices swing up and down, with one former regulator stating that regulators have to get on the same page to create certainty for investors and market participants.
Norm Champ, the former head of the SEC's Division of Investment Management, said in a recent CNBC interview that, as it stands now, regulators' inability to agree on what cryptocurrencies are is creating "uncertainty" for investors and market participants.
"The U.S. Treasury has said that they are currency or money, so you have to comply with money transfer regulations," Champ said. "The Internal Revenue Service has ruled them as property. The Commodity Futures Trading Commission has ruled they are commodities, and the Securities and Exchange Commission has put out a report suggesting that certain tokens—tokens that are above the cryptocurrency level – are securities and they've put out hints that they may consider the entire token universe as securities."
Four regulators "with four different interpretations," Champ said. "Things are clear as mud."
U.S. regulators need to "convene with practitioners and the industry and get everyone together in Washington to talk about what the right regulatory approach is going forward," Champ added. "Where we are with the fractured approach of for regulators is not the right approach for anyone—it's not the right result for investor protection or the right result for the cryptocurrency market. We need a lot more certainty."
The North American Securities Administrators Association warned investors Thursday to "go beyond the hype" and tread cautiously with investments involving cryptocurrency.
"The recent wild price fluctuations and speculation in cryptocurrency-related investments can easily tempt unsuspecting investors to rush into an investment they may not fully understand," Joe Borg, NASAA's president and Alabama securities regulator, said in releasing the alert. "Cryptocurrencies and investments tied to them are high-risk products with an unproven track record and high price volatility. Combined with a high risk of fraud, investing in cryptocurrencies is not for the faint of heart."
