Gensler: Many cryptos still fall under securities law, including stablecoins
The Washington Post caught up with CFTC Chairman Gary Gensler, who provided a comprehensive overview of the cryptocurrency market and a potential road to regulation in an interview.
- The Washington Post talked to the SEC Chair Gensler about crypto regulation
- Investor protection is a key motivation for regulation according to Gensler
- He thinks that there are many securities in the crypto sector that have not been registered.
During the interview, released earlier today, Gary Gensler discusses everything from regulation to volatility. Overall, the impression from the address is yet another strong call for regulatory reform with an emphasis on investor protection.
David Ignatius of The Washington Post opens the session by asking Gensler about the market’s drop in value over the previous few days. While it’s difficult to determine cause and effect, Bitcoin’s plunge has coincided with a global market downturn sparked by news of an Evergrande bankruptcy. Cryptocurrencies are highly speculative, according to Gensler, and claims that the uninformed investors will likely be harmed.
For the SEC, tax, AML/KYC compliance, and other public policy objectives are the most essential items on the docket. According to Gensler, the SEC is well-equipped to address any securities-related concerns that may emerge.
A crucial take-away from the debate is Gensler’s apparent enthusiasm for new technologies and innovations. He even alludes to decentralized lending platforms, one of the most popular areas in the market. Such comments indicate that American authorities are enthusiastic about encouraging constructive invention.
The crypto regulation debate heats up
During his term as SEC Chairman, Gensler has been at the center of discussions about the cryptocurrency market. He has neither been highly critical nor overly favorable toward the new asset class, and he’s made it a point to handle things neutrally.
“I do think this new technology is very interesting, and whoever Satoshi Nakamoto was, it’s led to real change,” he said. “It’s pushing at the side of central banks around the globe to reconsider how to provide payments systems, it’s pushing on the side as a catalyst for change in finance and fintech.”
Investor protection is a key motivation for regulation, which he has stated time and time again. Gensler thinks that the crypto market is still lawless, with investors enduring the consequences. Furthermore, he believes that there are numerous securities in the crypto sector that have not been registered.
Stablecoins are one of the most prominent focal issues, which has been labeled a potential hazard. According to reports, the U.S. Treasury is working on a regulatory framework for the area, which is important to DeFi market.
Stablecoins have recently come under fire as it was discovered that most “cash reserves,” as defined by regulators, are in fact not kept in cash.
In June, Tether revealed a breakdown of its USDT reserves, with just 2.6 percent kept in cash. The rest is made up of secured loans, corporate bonds, crypto holdings, and other investment vehicles.
All of the assets backing USDC, the world’s second largest stablecoin, will be moved into cash and short-term treasuries, according to recent statements by The Centre Consortium, which includes Coinbase and Circle.
Before joining the SEC, Gensler taught a blockchain course at MIT and was a co-director of Fintech@CSAIL, an MIT research group that investigates disruptive technologies. Many in the sector expected his education to result in a more positive regulatory perspective on cryptocurrencies, but recent remarks suggest he wants to increase regulation over the industry.
“I taught this and studied it for many years at MIT and I wouldn’t have dedicated my time to it if I didn’t think it was interesting and innovative,” Gensler said. “But, at the same time, I don’t think technologies last long outside of a social and public policy framework and in this case, we have to insure for investor and consumer protection.”
Gensler, on the other hand, is still unsure about the security and legality of the assets. Despite this, he acknowledged that the cryptocurrency industry has been able to influence broader finance. The rest of the world will be keeping a close eye on how the United States regulates the cryptocurrency market, which has been notoriously sluggish in terms of adoption. Given recent authorities’ unusually strong push for regulation, it does not appear to be lasting long. Given the unusually forceful movement for legislation from authorities in recent weeks, it doesn’t appear to be lasting much longer.