“Crypto is in dire need of regulation”, says Gary Gensler, the Chairman of the US’s Securities & Exchange Commission (SEC). He argues that crypto would not be able to see its full potential until it is subject to oversight by the regulator under proper regulation. There is no future for crypto if it continues to remain outside the oversight of SEC, claims Gensler.
Chairman of SEC, Gary Gensler appeared on Fox Business last week on 17th August 2021 where he discussed the regulation of crypto. He suggested initially that is currently looking at how it can ensure the security and safety of the public and their funds. We were indirectly referring to the public who have been investing their funds into digital investment vehicles. He said that SEC is acting as a neutral entity whose objective is to let technology and innovation prevail and flourish. He denied that SEC is against virtual currencies, especially Bitcoin, and said that SEC regards virtual currencies as a source of investment.
However, with regard to the safety of the investors, he suggested that SEC cannot act neutrally. In fact, he suggested that SEC cannot leave investors at the whim and fancy of the crypto world because of security concerns. He commented that on daily basis there are events taking place where investors have been exposed to monetary risks. They wanted to adopt innovation but in return, they were either defrauded, scammed, or, at worst, required to pay the ransomware. These are the things that call for the much-needed regulation to be put in place on an urgent basis. Already too much time has been wasted and too many people have fallen prey in an effort to adopt innovation.
Gensler explained that there is an ambiguity surrounding cryptocurrencies. He described that virtual assets are of two kinds, one is pure “currency” and the other is “securities”. The trading of virtual currencies does not require any registration. However, in the latter case, if someone is offering securities then the person/entity would need to obtain SEC’s registration. Without the registration, under the US law of securities, unregistered securities cannot be offered for sale and purchase. This is the law and there is no exemption for anyone, argued Gensler.
He further clarified that people are misguided into believing that majority of decentralized finance products are not securities. As a matter of fact, most of them are “securities”, therefore, the business offering them is bound to obtain SEC’s registration.
Gensler further opined that SEC wishes to see crypto utilizing its full potential. However, this is not possible until crypto is supervised under any crypto-specific regulation. Those who argue that SEC should stay away from crypto are wrong, said Gensler. He opined that SEC believes great benefits are lying ahead in crypto but in order to obtain them, crypto regulation is a must.