**Why the Current SEC Disclosure Framework is Not Suitable for Cryptocurrency Market**

According to reports, cryptocurrency investment company Paradigm stated that the current SEC disclosure framework is “not suitable” for the cryptocurrency market. The difference between traditional securities and cryptocurrency assets that have been regulated by the US Securities and Exchange Commission can be attributed to technology. Paradigm pointed out that there is a clear difference when comparing stocks and bonds with cryptocurrencies. Traditionally, the owner of a stock or bond has an interest in the legal entity in which the stock or bond was originally sold. Paradigm claims that this is not the case with cryptocurrencies, as their assets are not linked to the value of the issuer as they exist independently. This document outlines a framework that will better regulate the cryptocurrency market. This includes acknowledging that the technical ‘stack’ for the operation, trading, and settlement of encrypted assets is very different from the technical ‘stack’ for securities trading. Any regulation should also recognize that cryptocurrencies can accumulate value in a different way from traditional securities.

Paradigm claims that the SEC’s current framework is not suitable for cryptocurrencies

Cryptocurrency investment company, Paradigm, has reported that the current SEC disclosure framework for traditional securities is not suitable for the cryptocurrency market. In this article, we will examine how the differences between traditional securities and cryptocurrency assets are rooted in technology and how Paradigm’s proposed framework will better regulate the cryptocurrency market.

**What Makes Cryptocurrencies Different from Traditional Securities?**

Stocks and bonds are traditional securities on which the Securities and Exchange Commission in the US has regulated over the years. The owner of a stock or bond has a vested interest in the legal entity that issued it. They do not just represent a part of the company, but it is linked to its value.
On the other hand, Paradigm has claimed that cryptocurrencies operate independently of the value they represent. They do not have any legal entities associated with them. This is due to the difference between the technical ‘stack’ for the operation, trading, and settlement of encrypted assets and the technical ‘stack’ for securities trading. This difference poses a major hurdle to the regulation of cryptocurrencies.

**Why is the Current SEC Disclosure Framework Not Suitable?**

According to Paradigm, the current SEC disclosure framework is not compatible with the cryptocurrency market. This is because the framework is centered on traditional securities, and these securities function differently from cryptocurrencies. This framework does not take into account the technical differences and challenges related to the issues at stake in the crypto market.
Cryptocurrency markets require a different set of rules and regulations from traditional securities. Cryptocurrencies accumulate value differently from traditional securities, and it is a dynamic and fast-paced market that demands timely and accurate information that is different from traditional securities.

**What is the Proposed Paradigm Framework?**

In response to the issues pointed out, Paradigm has proposed a different framework that is suitable for the cryptocurrency market. The proposed framework acknowledges the technical differences in the operations, trading, and settlement of encrypted assets compared to traditional securities.
The framework proposes the creation of a new regulatory body that will be dedicated to cybersecurity and the regulation of the crypto market. This would involve the creation of a new classification of securities solely for cryptocurrencies, digital assets, or other decentralized technologies.
To comply with the proposed regulations, cryptocurrency companies would need to submit timely and accurate regulatory reporting that would provide adequate protection to investors.

**Conclusion**

The current SEC disclosure framework is not suitable for the cryptocurrency market. The differences between traditional securities and cryptocurrency assets point to the fact that the technical ‘stack’ for the operation, trading, and settlement of encrypted assets is different. Paradigm’s proposed framework addresses the challenges and technical issues facing the crypto market by acknowledging and catering for the differences between traditional securities and cryptocurrencies.

**FAQs**

**1. Is it true that cryptocurrencies operate independently of the value they represent?**
Yes, that’s true. Cryptocurrencies are not tied to any legal entities, and their value operates independently.
**2. What makes cryptocurrency different from traditional securities?**
The difference between cryptocurrencies and traditional securities lies in technology. Traditional securities tend to have legal entities associated with them while cryptocurrencies do not.
**3. What is the proposed Paradigm framework?**
Paradigm proposed a different framework that caters to the challenges of the crypto market by acknowledging and catering for the differences between traditional securities and cryptocurrencies. The framework proposes the creation of a new regulatory body dedicated to cybersecurity and the regulation of the crypto market.