The implicit permission for exchanges to engage in fraudulent practices -- such as insider trading and front running -- which would be illegal in any other conceivable market.
I am asserting that the spirit of securities regulations were to address fraud in investment markets. The only thing that separates bitcoin from stocks or physically-backed commodities in this sense is the existence of an underlying asset. I am not convinced that this basis alone permits market actors to legally engage in fraud.
I think you are confused as to how the U.S. legal system works. Are you British? Perhaps it's different in the U.K. I used to live there but don't know the nuances of their legal system.
If something doesn't fall under the SEC regulation, then they cannot use securities laws to prosecute. It's extremely clear. Sure, they may in the future but that would not apply to something that happened today and it would have nothing to do with precedent. Actually, the CFTC has already said that they could easily have the power in the future to regulate so it's highly unlikely it would ever be an SEC issue.
The courts do not have the power to pick an SEC regulation and arbitrarily apply it to Bitcoin. It's either SEC regulated or it's not. No precedent is needed. Currently, Bitcoin exchanges fall under FINCEN as MSBs.
http://fincen.gov/statutes_regs/guidance/html/FIN-2013-G001.htmlhttp://fincen.gov/financial_institutions/msb/msb.registration.htmlThe things that would make SEC laws apply are -- if someone had a Bitcoin fund and used it to defraud. Any equity fund is regulated by the SEC, whether it contains Bitcoins or potatoes.
And no -- insider trading is not illegal in any other market. It's illegal in the stock market but not, to a large degree, in the commodity markets. And the FOREX market, a massive global currency market, does not have insider trading laws. It is 100% legal to trade on insider information in FOREX. The only time it becomes illegal in any market is if a regulatory authority that deems it illegal has the power to regulate that market. There is no ambiguity and a judge cannot simply create a precedent that changes this fact. So, insider trading is currently legal for Bitcoin in the U.S. It's actually quite simple and not dependent on a precedent.