Add a top U.S. financial regulator to the list of people concerned that lightly policed cryptocurrency markets make easy targets for manipulators.

Warding off market cheaters in digital currencies is among the Securities and Exchange Commission’s major concerns as it monitors those assets, according to Brett Redfearn, head of the regulator’s Division of Trading and Markets.

“We are concerned about a lot of the issues around manipulation, whether it’s spoofing, or any other forms of market manipulation that are out there,” he said Thursday at an event in New York. “ Spoofing, front running, wash trading, pump-and-dump, insider trading — there’s a question of, how are they being watched out for?”

Few cops are currently on the beat watching for rigging, in part because regulators are still trying to work out who’s responsible for what and also because it’s not clear they can do much until the exchanges register with them. Cameron and Tyler Winklevoss, who run the Gemini exchange for Bitcoin and Ether, recently proposed that the industry start self-policing to help fill in the vacuum.

U.S. regulators are grappling with the “Wild West” of trading digital assets including Bitcoin, Ether and digital tokens. The SEC is examining a range of businesses in the nascent industry, including initial coin offerings — or digital token sales that allow buyers to take a stake in companies — as well as cryptocurrency-focused hedge funds and trading venues.

The trading behaviors Redfearn mentioned are all banned in traditional financial markets — ways of fooling the market about the right price for securities and pocketing ill-gotten gains or, in the case of insider trading, making a trading decision based on non-public information. While laws around these kinds of activities are clear when it comes to trading traditional securities, in cryptocurrencies the lines appear to be blurred.

Other priorities when it comes to digital assets include preventing fraud, money laundering and theft, Redfearn said. He compared the nascent industry to the early days of electronic equity trading in the U.S., when certain rules were still unclear and electronic platforms weren’t all linked to one another. Regulators eventually stepped in to create new rules around how trading should happen in the new landscape.

“There was a lot of evolution that had to take place,” Redfearn said. “And there’s no doubt in my mind that there’s more evolution that needs to take place in this space.” — Bloomberg

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