Bitstamp to Halt Trading for SEC-classified Cryptos in the U.S.

Bitstamp has announced that it will cease trading for seven cryptocurrencies in the United States starting from August 29.

The affected tokens, which include have been classified as securities by the US Securities and Exchange Commission (SEC).

This decision comes as a result of legal actions taken by the SEC against prominent exchanges such as Binance and Coinbase, in which the regulatory body asserted that certain tokens, including the ones Bitstamp is discontinuing, meet the criteria for being classified as securities.

This reclassification has significant implications for crypto exchanges, leading to heightened regulatory oversight, potential legal liabilities, and increased regulatory complexities.

Why Does it Matter if a Cryptocurrency Is Classified as a Security by the SEC?

When a cryptocurrency is classified as a security by the US Securities and Exchange Commission (SEC), it means that the SEC considers that particular token to have attributes that are similar to traditional securities, like stocks or bonds.

This reclassification has significant implications for both the cryptocurrency itself and the exchanges that list it.

Cryptocurrencies classified as securities fall under a stricter regulatory framework, meaning they are subject to increased oversight by regulatory authorities.

Additionally, there are potential legal and regulatory complexities that arise when trading these tokens.

Bitstamp's Next Steps

Bitstamp emphasized that users should complete any buy or sell transactions involving the affected assets before the specified deadline.

The platform indicated that it may make adjustments to its crypto offerings in response to the evolving regulatory environment and the associated obligations.

It's worth noting that Bitstamp's move to halt trading of these tokens is not unique, as other exchanges have taken similar actions in response to the SEC's actions.

For instance, Binance.US discontinued several trading pairs earlier.

eToro also restricted US customers from accessing specific cryptocurrencies.