Posted 2 months ago | by Catoshi Nakamoto
During the Aspen Security Forum conference, U.S. SEC Chairman Gary Gensler begged Congress to give the Security and Exchange Commission more authority to oversee the crypto market, echoing previous calls by the IRS for the same. Gensler also stated that cryptocurrency feels like the “wild west” right now, adding, that “regulations are coming” singling out “Defi and stablecoins.”
Gensler stated that the SEC needed more power to oversee the cryptocurrency industry.
“This asset class is rife with fraud, scams and abuse in certain applications,” Gensler told the conference. “We need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks.”
Gensler a former Massachusetts Institute of Technology (MIT) professor who taught blockchain, spoke about crypto at the Aspen Security Forum, stating the SEC has “taken and will continue to take our authorities as far as they go.” Gensler also commented that the SEC wouldn’t be re-looking at the heavily flawed Howie Test, expressing: “Certain rules related to crypto-assets are well-settled. The test to determine whether a crypto asset is a security is clear,” he said. “There are some gaps in this space, though: We need additional Congressional authorities to prevent transactions, products, and platforms from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector.”
On that note, Gensler told Bloomberg in a recent interview that he would be straight edge with regulation with investor protection being his first priority.
“While I’m neutral on the technology, even intrigued—I spent three years teaching it, leaning into it—I’m not neutral about investor protection.” Adding, “If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud.”
Gensler also made it clear that many digital assets were potential securities and should fall under the view of the SEC.
“While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities,” Gensler said.
“I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight,” Gensler explained. “This leaves prices open to manipulation. This leaves investors vulnerable.”
“While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities,” the SEC chairman added.
It should be noted the SEC already has significant authority over digital assets, raising the question, what more legal authority does the SEC want? The answer to that question seems to be answered in May earlier this year when Gensler pleaded with Congress to give the SEC oversight over monitoring crypto exchanges. He additionally said platforms that pool digital assets could be similar to mutual funds, meaning the SEC could regulate them. If that were to happen Defi staking and automated market-making used by decentralized exchanges may be dead in the water.
Of course, this could become a game of cat and mouse between the SEC, other agencies, and developers who code such technology. In fact, calls for regulation may fuel privacy-oriented developers or Cypherpunks against government oversight, and overregulation. This could also result in some technology moving underground to truly decentralized obscure hosting like an onion address on the darknet. Which would only end up making the crypto industry more dangerous opening investors to more scammers than Uniswap and Binance Smart Chain minted tokens.
This news comes just days after unclear legislation was rushed into the U.S.’s Infrastructure Bill. As Bitboy Crypto reported, U.S. lawmakers including — Sen. Ron Wyden (D-OR), Rep. Warren Davidson (R-OH), Rep. Ted Budd (R-NC), and Rep. Pat Toomey (R-PA) — have all voiced concerns against the cryptocurrency tax provision in the $1 trillion infrastructure bill which in its current form could kill the crypto industry. While the bill was slightly improved from the original which passed Senate approval, the text still is seen as being “unworkable,” according to Senator Pat Toomey, who said, “I plan to offer an amendment to fix it.”
The U.S. Senate Committee on Banking, Housing, and Urban Affairs issued a statement by Ranking Member Pat Toomey on the legislation.
“Congress should not rush forward with this hastily-designed tax reporting regime for cryptocurrency, especially without a full understanding of the consequences. By including an overly broad definition of broker, the current provision sweeps in non-financial intermediaries like miners, network validators, and other service providers.”
The former Goldman Sachs partner of 20+ years, Gensler, also made a somewhat delusional comment during the Aspen Security Forum about the automobile industry not fully taking off until governments laid out driving rules. Gensler expressed that “Speed limits and traffic lights provided public safety but also helped cars become mainstream.” He added, “It’s only with bringing things inside—and sort of clearly within our public policy goals—that a technology has a chance of broader adoption.”
Gensler stated that the SEC was looking at at least seven different industries within crypto, including — initial coin offerings, trading venues, lending platforms, DeFi, stablecoins, custody, and exchange-traded funds. Gensler has signaled strongly that stricter regulation is coming for the $1.6 trillion digital-asset market.
You can watch the full speech by Gensler at the Aspen Security Forum on cryptocurrency below.
Bitcoin is currently trading at [FIAT: $38,212.33] DOWN -1.3% in the last 24 hours according to Coingecko at the time of this report.