US-based cryptocurrency exchange Bittrex says that it is compliant with federal regulations governing securities trading.

The exchange, which is headquartered in Seattle, issued a statement on Wednesday assuring its customers that its token review process is compliant with rules that prohibit companies from creating trading markets for unregistered securities.

Bittrex said:

“As a U.S.-based digital currency exchange, Bittrex is committed to incubating new blockchain technology projects and offering innovative, compliant digital tokens to our customers. Bittrex uses a robust digital token review process to ensure the tokens listed on the exchange are compliant with U.S. law and are not considered securities.”

The statement was a direct response to an announcement published by the Securities and Exchange Commission (SEC) — also released on Wednesday — that warned it is “potentially unlawful” for cryptocurrency exchanges to list initial coin offering (ICO) tokens, as the agency deems many of these ICOs to be unregistered securities offerings.

The agency signaled that it intends to crack down on cryptocurrency trading platforms that list security tokens, a move that appears to be a bid to coax exchanges to register with the SEC, which would provide regulators with more authority to supervise the nascent cryptocurrency spot trading markets.

Most exchanges are currently licensed at the state level as money transmitter businesses, and US regulators have stated their desire to implement more oversight at the federal level.

Responding to the SEC’s warning, Bittrex noted that as a part of its listing process it typically requires a memorandum or opinion from a US-qualified law firm that “presents the factual and legal basis” that a token “is not a security under applicable securities laws” and that trades of the token “would not be subject to regulation under any applicable laws applicable to trading of commodities.”

“Bittrex is committed to helping advance the United States’ global leadership in this emerging industry, and we look forward to continuing our proactive dialogue with the SEC and other regulators on how to build a secure, fully-regulated environment for blockchain that encourages innovation and economic growth,” the firm concluded.

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