After the regulatory thriller that took place in the EU Parliament in the last few weeks, the US Securities and Exchange Commission (SEC) is now shifting up a gear when it comes to regulation. Speaking at the Penn Law Capital Markets Association Annual Conference, Gary Gensler, head of the agency, reiterated that crypto firms are likely to trade in securities — which thus fall under the SEC’s regulatory purview. It is also to be examined whether crypto investors should enjoy the same protection as all other investors:
These crypto platforms play similar roles as the traditional regulated exchanges. Therefore, investors should be protected in the same way.
Gary Gensler, Source: SEC
Gensler was particularly critical of stablecoins in his presentation. The entire stablecoin market raises concerns about its use for illegal activities. Crypto transactions, Gensler said, allowed users to bypass the traditional banking system, making it harder to track money laundering, taxes, and compliance.
Gensler’s plans come about a month after the US government launched crypto regulation. According to announcements by US President Joe Biden, different government agencies should conduct studies on cryptocurrencies within nine months. These concern, for example, consumer and investor protection, financial crime and the evaluation of the risks for the global financial market through crypto. The decree also provided for discussion about the introduction of a digital US dollar.
Gary Gensler – a Crypto Pro?
Gary Gensler is no stranger to the world of finance. After earning his MBA from the renowned Wharton School of Business, he worked at the investment bank, among other places Goldman Sachs before joining the US Treasury Department. Between 2009 and 2014, he evolved as Chairman of Commodity and Futures Trading Commission (CFTC) Requirements for the regulation of derivatives. Eventually, in 2020, he was nominated by US President Joe Biden to chair the Securities and Exchange Commission. While the leading financial authorities in Europe still look very poor in terms of crypto knowledge, Gensler seems to be fully in the matter. In 2018, for example, the 64-year-old gave lectures on cryptocurrencies at the renowned Massachusetts Institute of Technology (MIT). You can find the video for it here.
Regulation is coming with full force
After looking at the developments in the crypto space from the sidelines, the regulators now seem to be taking on the crypto market across the board. Just a few days ago, the vote in the EU Parliament on a possible ban on unhosted wallets shook the entire crypto landscape in Europe. Even if the final draft of the law has not yet been fully approved by all instances, it does mark a turning point in the regulatory debate. But regardless of whether the project will be ratified or not. The associated uncertainty is likely to mean that many young crypto startups will tend to avoid Europe in the future. The crypto expert Philipp Schuld von sees it too Rudy Capital so:
Young start-ups depend on medium to long-term legal certainty. Unfortunately, this is currently being denied by the EU – with negative consequences for the European crypto start-up scene. This can have a negative effect on investors’ ability to raise capital and make funding difficult or even impossible. Should this become a permanent situation, we will see a further acceleration in the exodus of start-ups to non-European countries.
Philipp debts
In contrast, the regulatory projects in the USA seem to have been rather mild so far. Nevertheless, the days of the “wild (crypto) west” seem to be finally over.
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