- Crypto exchanges have shied away from registering and working within the nation’s regulatory framework.
- Gary Gensler, chairman of the SEC, warns that the $2 trillion crypto industry is too big to exist outside the public policy framework.
- Cryptocurrency experts like Leigh Travers have emphasized the need for regulation in the mass adoption of cryptocurrencies.
The United States Security & Exchange Commission’s (SEC) chairman suggests that there is a sufficient number of cryptocurrencies that qualify as securities. The ongoing legal tussle between the SEC and Ripple is on the grounds of the same suggestion.
SEC finalizes rules to suspend trading on exchanges that fail to comply with regulators
The SEC has a long-standing history of attempts to regulate cryptocurrencies and exchanges. Proceedings in the SEC v. Ripple case have led to a slew of negative comments on former SEC chairmen and their views on Ethereum and XRP. The case is drawing to a slow close as Ripple Labs files a motion to compel the SEC to reveal the cryptocurrency holdings of its employees.
Amidst this tussle, Gary Gensler, SEC Chairman, questions the survival of the $2 trillion cryptocurrency industry outside of the regulatory framework. Gensler shared his disappointment with cryptocurrency exchanges and addressed them,
Talk to us. Come in.
Gensler warned that cryptocurrency platforms need regulation to survive. Registering with the SEC may soon become essential for existence. The government oversight agency is finalizing rules to suspend trading activities on exchanges that fail to comply with its norms.
At about $2 trillion of value worldwide, it’s at the level and the nature that if it’s going to have any relevance five and ten years from now, it’s going to be within a public policy framework. History just tells you, it doesn’t last long outside. Finance is about trust, ultimately.
Ahead of the warnings from the SEC Chairman, experts in the crypto industry have acknowledged the need for regulation to drive mass adoption of Bitcoin and cryptocurrencies.
Leigh Travers, CEO of Binance Australia, recently issued a statement,
From an industry perspective, I know it is imperative that we continue to develop our relationships with regulatory bodies while reinforcing our company’s commitment to compliance and best practices.
The SEC claims to impose public policy imperatives on crypto to protect investors, guard against illicit activity and maintain financial stability. However, several crypto collaborative groups have started working on standards that regulators can adopt.
The key challenge here is that most working groups like the Cryptocurrency Compliance Co-operative (CCC) – founded by Bitcoin ATM operators Digital Mint and Coinsource along with blockchain analysis platform Chainalysis – and the Crypto Council for Innovation – founded by crypto exchange Coinbase, mutual fund giant Fidelity and payments giant Square – lack “Self-Regulatory Organization” (SRO) status.
Obtaining SRO status would enable CCC and CCI to approach regulators and share suggestions on the impact of a public policy framework on the crypto industry.
The SEC chair’s comments on the cryptocurrency industry and its survival carry weight within the ecosystem due to his credentials. Gensler has previously taught a course, “Blockchain and money,” at MIT. His opinion on the issue is well-regarded. He is invited to testify on crypto and other matters before the European Parliament’s economic and monetary affairs committee.
It remains to be seen whether the $2 trillion crypto industry can be policed by the SEC that has an annual budget of $2 billion. Gensler has his hands full with oversight on $100 trillion in securities tradings, 24 national exchanges, and over 7,000 reporting companies.
Gensler maintains his “technology neutral” stance, and his suggestions are focused on investor protection.
If crypto is going to be widely adopted, it needs some rules of the road & a cop on the beat to enforce them.
To be clear, I am technology-neutral.
What I’m not neutral about: Investor protection. pic.twitter.com/e6GsSAyXhB
— Gary Gensler (@GaryGensler) August 3, 2021