Is the new chairman of the US SEC still a “friendly army” in the crypto industry?

On August 3, Gary Gensler, the new chairman of the US Securities and Exchange Commission (SEC), conveyed a signal to strengthen supervision of the cryptocurrency field. He likened the current cryptocurrency industry to the “Wild West”, filled with hype and fraud, and the regulatory authorities still lack adequate investor protection mechanisms.

Gensler emphasized the most important mission of the SEC, which is to protect investors. He said that many of the encrypted tokens are offered and sold as securities. These products are subject to securities laws and must operate within the securities system. This is also the current SEC’s main regulatory method for the cryptocurrency industry.

Gensler revealed that the SEC is studying at least seven areas of the cryptocurrency market, including regulatory exploration of DeFi, trading platforms and stablecoins. He also called on Congress to give the SEC more authority and resources to supervise the cryptocurrency industry to prevent transactions, products and platforms from falling into regulatory loopholes.

This new chairman of the SEC, who took office in March of this year, has shown a strong supervisory style. Because he taught blockchain and cryptocurrency-related courses at the Massachusetts Institute of Technology, the outside world once regarded him as a “friend” of the crypto industry. Today, this illusion has been broken.

In the view of some industry insiders, the strengthening of supervision is conducive to the development of the encrypted asset industry in the long run. Gensler also emphasized that if cryptocurrency is to realize its potential as a catalyst for change, “we’d better incorporate it into a public policy framework.”

SEC’s cryptocurrency regulatory research includes DeFi

The attitude of Gary Gensler, the new chairman of the US Securities and Exchange Commission (SEC), toward the crypto industry has always been a concern. At the Aspen Security Forum held on August 3, the official who became the chairman of the SEC in March this year, with the theme of “cryptocurrency and national security”, publicly published his first public comments on the cryptocurrency industry. the opinion of.

Gensler believes that at present, the United States does not have sufficient investor protection mechanisms in cryptocurrency, “it is more like the Wild West at this time.” In his observations, certain applications related to crypto assets are full of fraud and scams. In many cases, investors cannot obtain strict, reciprocal and complete information. Therefore, the SEC will use its power to maximize the supervision of the cryptocurrency market.

In Gensler’s view, most digital tokens are like investment contracts, offered and sold as securities, and therefore should be regulated. However, in the current encrypted asset market, many tokens may be unregistered securities, without the need to disclose information and accept market supervision, which makes prices easily manipulated.

Is the new chairman of the US SEC still a "friendly army" in the crypto industry?

SEC Chairman Gary Gensler

In fact, linking cryptocurrencies to securities and supervising cryptocurrencies in accordance with the relevant regulations of the Securities Law is a kind of supervision method that the SEC has been trying for a long time.

In December last year, the SEC announced a lawsuit against Ripple and its two executives, accusing them of raising more than $1.3 billion through an unregistered, ongoing digital asset securities offering. The so-called “digital asset securities” is the mainstream crypto asset XRP in the currency circle. The SEC believes that XRP is issued and sold by centralized companies and is a security, but Ripple has not registered their quotations and sales of XRP, nor has it obtained any registration exemption, violating the registration requirements of the Federal Securities Law.

In public speeches, Gensler repeatedly emphasized the importance of protecting investors. He revealed that the SEC is studying at least seven areas of the cryptocurrency market, including DeFi, trading platforms and stablecoins.

Although DeFi is named decentralized finance, hacker attacks and frauds often occur in this area. Gensler pointed out that DeFi lending may fall under the supervision of the SEC because it usually provides specific interest rate returns. He also said that the platform for pooling crypto assets may be similar to mutual funds, which means that the SEC can supervise them.

When talking about the regulation of trading platforms, Gensler said that these platforms have major gaps in investor protection. Although many overseas platforms claim that they do not provide services to American investors, there are accusations that the American public can still buy and sell cryptocurrencies on these trading platforms. “There is no doubt that if there are securities on these trading platforms, according to our law, they must be registered with the committee unless they meet the exemption conditions.”

Gensler also observed that crypto-asset transactions are usually done with stablecoins. He is worried that stablecoins may be used to avoid anti-money laundering and taxation, which may affect national security. “These stablecoins may also be securities. If so, they should fall under the jurisdiction of the SEC.”

Strict regulatory attitude breaks optimistic expectations

It is worth noting that at the Aspen Security Forum, Gensler also specifically called on Congress to give the SEC more authority and resources to supervise the cryptocurrency industry to prevent transactions, products, and platforms from falling into regulatory loopholes. This conveyed his intention to increase supervision.

Gensler’s harsh regulatory style for the encryption industry has broken many people’s illusions about him. When he assumed the new SEC chairmanship, some people thought that because of his academic background in the crypto asset industry, he might be more open to supervision in this area. But at present, Gensler cannot be regarded as the “friendship” of the crypto asset industry.

Gensler has a rich life history. He has worked at Goldman Sachs for 20 years. During the Obama administration, he was hired as Deputy Secretary of the Treasury, and then as Chairman of the US Commodity Futures Commission. After leaving these positions, he chose to work at MIT teaches courses related to blockchain and cryptocurrency.

According to reports, Gensler is teaching the development of Bitcoin and the impact of blockchain on the financial industry in this course. At a blockchain business summit in 2018, Gensler also stated that blockchain technology has the real potential to change the financial world; although there are still many technical and business challenges to be overcome, this innovation can reduce the financial system’s Cost, risk and economic rent. “I am an optimist and I want to see this technology succeed.”

These statements made the outside world think that after Gensler took the helm of the SEC, the department is expected to approve the Bitcoin ETF for the first time. But it is clear that Gensler is now in his place and can only do his job. As the chairman of the SEC, his primary responsibility is to control the securities industry and protect investors, not to develop the blockchain.

In an interview with Bloomberg on August 4, Gensler once again emphasized that his rich background in blockchain and cryptocurrency does not mean that he will make any concessions for this nascent industry. He said that although he is neutral and even “very curious” about the technology, it is more important to protect investors from fraud.

According to statistics, 11 institutions have already submitted the S-1 form for Bitcoin ETF applications to the SEC. Among them, VanEck Bitcoin Trust submitted the application first, and the SEC began the review process on March 19 this year. However, in May and June of this year, the SEC announced twice that it had postponed its decision and hoped to solicit further public comments. According to requirements, the SEC needs to make a final decision on the application before November 14 this year.

From Gensler’s current statement, he will focus more on protecting investors, including exploring the supervision of cryptocurrency and DeFi. In this case, the SEC may be particularly cautious in the face of Bitcoin ETFs with higher investment risks.

At present, not only the United States, but also countries such as China, Canada, and the United Kingdom have strengthened supervision of the cryptocurrency industry. In the view of some people in the industry, stricter regulation is not a bad thing in the long run. As regulatory rules become more clear, relevant practitioners can also find a way to comply with the regulations, so that they will no longer “cross the river by feeling the stones.” “.

Gensler also expressed a similar view: “For those who want to encourage cryptocurrency innovation, I want to point out that throughout history, financial innovation will not flourish outside of our public policy framework. The core of finance is trust, the market The core of trust is investor protection. If this field is to continue, or to realize its potential as a catalyst for change, we better incorporate it into the public policy framework.”


Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

Leave a Reply