The head of the US Securities and Exchange Commission has been clamoring that cryptocurrencies need more supervision.
Gary Gensler has a lot to say to Wall Street and cryptocurrency practitioners
In his short time leading the US Securities and Exchange Commission, Gary Gensler has rocked Wall Street and the cryptocurrency industry.
Before his agency took substantive enforcement or regulatory actions, most of the work he did was done in his language.
He has a lot of remarks about the need to strengthen regulatory control over Wall Street, cryptocurrencies, and Chinese companies, which have affected the market and aroused strong responses from the industry.
Gensler, who was appointed as the head of the US Securities and Exchange Commission in April this year, is no stranger to Wall Street. He was a partner of Goldman Sachs. He also has a background in cryptocurrency and once taught a course on cryptocurrency at the Massachusetts Institute of Technology. This has led some people to hope that he can show a certain degree of friendliness to the cryptocurrency industry, or at least no hostility.
Because of his background in managing the CFTC, he helped reform the issue of credit default swaps after the 2008 financial crisis. People are expecting him to strengthen law enforcement on Wall Street after the Trump era. When he was confirmed, regulators and politicians were watching Robinhood and the meme stock frenzy that occupied Wall Street in January. Cryptocurrencies are hardly included on Washington’s agenda.
The cryptocurrency industry wants an informed regulator, and Gensler said he knows the industry too well. Then Gensler began to speak, and here are some of his highlights this year.
In early May, at the hearing of the House Financial Services Committee, Gensler made his first important appearance in Congress as the head of the SEC. He made it clear that paying for order flow, that is, wholesalers paying retail brokers for processing retail orders, will be subject to SEC review.
He pointed out that paying for order flow may be a kind of “conflict of interest”, and these conflicts are “intrinsic” in the system. Gensler cited a case in which Robinhood settled with the SEC in December 2020, and pointed out that Robinhood has been able to determine how much profit to retain from trading spreads and how much profit to transfer to investors.
Gensler also made it clear that he is not satisfied with the current regulatory environment for cryptocurrencies.
Observation of China
In July, Gensler warned of the risks of Chinese companies listing in the United States. He focused on variable interest entities or VIEs. Gensler is seeking to provide greater transparency to investors in Chinese companies, because Chinese companies do not always make the same disclosures or subject to the same audit supervision as American companies do. Under pressure from US and Chinese regulators, Didi delisted from the New York Stock Exchange in December.
On August 3, Gensler mentioned cryptocurrency again in a speech at the Aspen Security Forum. “Right now, we just don’t have enough investor protection in terms of cryptocurrency. Frankly speaking, at this time, it’s more like the Wild West.”
“He said: “This asset class is full of fraud, scams and abuse in certain applications. “There is a lot of hype and bubbles about how cryptocurrency assets work. In many cases, investors cannot get strict, balanced and complete information.”
Two days later, Gensler called for legislation in a letter to Elizabeth Warren to solve the problems of cryptocurrency transactions, lending and decentralized finance. This is a realization that if there is no federal legislation, there are things Gensler cannot do in the SEC itself-this may be one reason why he has been talking publicly about cryptocurrency but has not yet taken substantive action.
“In my opinion, the focus of legislation should be on cryptocurrency trading, lending and DeFi platforms,” he wrote. “Regulators will benefit from additional discretionary authority to write rules and attach guardrails for cryptocurrency trading and lending.”
Just a reminder: Gary Gensler is not your father
In September, Gensler told the Senate Banking Committee that he would not rule out allowing the SEC to regulate stablecoins because “they are likely to be securities.” Although he did not stand up and say that they are definitely securities, he said that the SEC can supervise stablecoins – or at least be interested in doing so. Later, in November, the presidential working group called for bank-like supervision of digital tokens linked to legal tender.
He also refuted the senators’ criticism that the US Securities and Exchange Commission has been vague about when crypto tokens are and are not securities. “I think there have been quite a few cases over the years that can prove: I think the core of our securities law [is] protecting investors from fraud. They can decide. They can take risks. I am not negative about cryptocurrencies, nor Not minimalism. I just think it would be the best if it were within the investor protection system established by Congress.”
In perhaps the most memorable exchange at the hearing, he was asked by a senator about his agency’s views on climate risk disclosure. “You, as the chairman of the US Securities and Exchange Commission, supervise people and companies. Do you think you are their father?” Senator John Kennedy asked.
“No,” Gensler said.
“Then why are you acting like this?” Kennedy replied. “Why do you impose your personal preferences on cultural and social issues on the company…. I believe you have your personal feelings about abortion. Do you have plans to implement or impose these values on the company?”
“Sir, I don’t think I did that,” Gensler replied. “What I have always wanted to do is to say that if investors want information about climate risks, we at the SEC have a role to take out some things to inform and comment, do economic analysis, and really see what investors are saying.”
In late September, Gensler compared cryptocurrencies to “poker chips” at an event in the Washington Post. He once again pointed out that the help of Congress will make supervision easier. However, he said that the SEC has enough room to regulate cryptocurrencies. “But as far as the US Securities and Exchange Commission is concerned, I do think we have strong powers, but there are also gaps that I have identified.”
At the same time, some major players in the cryptocurrency industry have begun to respond to Gensler’s criticism. Their response was mainly to hold someone other than Gensler responsible. Andreessen Horowitz said that it is time to “surpass the US Securities and Exchange Commission,” and Coinbase criticized the agency more directly, proposing to establish a new regulatory agency to oversee cryptocurrencies. Coinbase has been dissatisfied with the SEC’s failure to approve its Coinbase Lend product.
In a speech at the Securities Enforcement Forum in November, Gensler used sports as a metaphor: “Think of a football game without referees. The team started violating the rules without worrying about penalties. This game is not fair, maybe in After a few minutes, it will be no more fun to watch.” He continued to defend the role of the US Securities and Exchange Commission in protecting investors.
He seemed to be responding to some proposals from the cryptocurrency industry and indicated the territory of the SEC. Although there are many agencies that oversee the cryptocurrency industry – such as the Office of the Comptroller of the Currency and the Commodity Futures Trading Commission – Gensler has made it clear that he will not abandon the role of the SEC.
And he defended the US Securities and Exchange Commission’s control of some border-respecting companies. He said: “Some market participants may call this’law enforcement supervision’,” he said. “I just call it’enforcement’.”
Cleaning up the third aisle
In December, Gensler talked about the need for active supervision, rather than swooping in after a crisis. Gensler said at the DACOM summit: “We want to clean up the third aisle (referring to the cryptocurrency industry is good at using lawyers and tax payment to avoid regulatory issues). And the public will say:’Where is the official department? The Daily News used a more moderate tone in its activities, requiring cryptocurrency exchanges to “join in, cooperate with the US Securities and Exchange Commission, and obtain registration.” “Cryptocurrency trading companies that hold customer tokens and execute orders became the focus of Gensler’s regulatory remarks at the end of 2021, and the chairman of the SEC positioned them as natural objects of institutional supervision.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/sec-head-gary-gensler-has-a-lot-of-views-on-cryptocurrencies-in-2021/
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