The SEC marked over 20 small crypto companies as “unregistered soliciting entities,” expanding its Public Alert: Unregistered Soliciting Entities (PAUSE) list. The designation is used for “entities that falsely claim to be registered, licensed, and/or located” in the United States.
Apart from “unregistered soliciting entities,” the list also includes those impersonating registered securities firms, as well as “bogus” regulators.
In total, the SEC added 58 soliciting entities, 11 impersonators of genuine firms, and one “regulator,” bringing the number of entities listed on the PAUSE to 1408.
What is the PAUSE list?
The PAUSE is meant to inform investors about dishonest solicitation based on investor complaints, but it’s not indicative of any violations of federal securities laws, the SEC said in a press release. The Commission admitted that it did not assess the “merits” of any securities being offered by the listed companies.
At the same time, the SEC does require solicitors to register and meet “minimum financial standards and disclosure, reporting, and recordkeeping requirements,” which puts the PAUSE-listed entities in a sort of gray area.
After the new additions, the PAUSE lists 982 unregistered soliciting entities, including several dozen crypto companies. Establishing an exact number is difficult, because many companies have ambiguous names and no accessible website.
A new crypto crackdown?
The inclusion of this many crypto companies could suggest that the SEC is preparing to launch a new crackdown on the sector.
Earlier this month, SEC Chair Gary Gensler compared crypto markets to the dotcom bubble that went unchecked and ended up creating “significant tremors,” and made clear that the SEC intended to extend existing investor protections to the crypto markets. Before being made Chair of the SEC, Gensler chaired the Commodity Futures Trading Commission (CFTC), which now wants to play an “increasingly central role” in the regulation of digital assets.
Together with Joe Biden’s recent executive order heralding an “all-government” effort to straighten out crypto regulation, the recent developments suggest that the classification of specific crypto assets could be coming soon.