By Alicia Maher
The Chairman of the United States SEC has called for more cryptocurrency regulations. Gensler had discussed issues on fraudulent cryptocurrency schemes and crypto abuse to back his case. The SEC chair had raised red flags about digital assets at an Investor Advisory Committee meeting held last week. He called for better protection of investors.
Gary Gensler’s Concerns
Gary Gensler decried the proliferation of Ponzi schemes and frauds in the space. He stated that hype and marketing usually surround cryptocurrency projects. Gensler believes that this hype prevents many investors from getting enough information about projects before they throw their funds in.
The Chairman revealed that the decentralized finance space had many loopholes exposing investors to harm. He said that the DeFi space was vulnerable to market manipulations, and several American citizens who carry out financial transactions on this platform were at risk. The SEC chair says if the system continues like this, many people will find themselves in very precarious situations. He also spoke about crypto firms he believed to be selling unregistered securities, which was against federal laws.
Lack Of Progress In Crypto Regulation And Unhealthy Communication
Despite the continuous declarations by the SEC chair, not much has been seen in the way of progress. The SEC is yet to create clear regulations and enforcement laws to govern the cryptocurrency industry. There also seems to be no real understanding between the SEC and the cryptocurrency industry despite many claims by the SEC of consulting with the industry.
The Chief Legal Officer of Coinbase, Paul Grewel, surmised the situation in a post on the company’s blog. He mentioned that the SEC asked the firm to drop their new project, Lend threatening to sue them if they go ahead with it. Paul Grewel noted that the regulatory body had given no clear reason for why the company should do this. He expressed that a working regulatory environment should not place such an embargo without sufficient reasons. The executive disclosed that good communication is necessary for proper regulation.
All of these, however, seem to be running parallel to what Gary Gensler says in his speech. In his speech, he urged crypto industry players to speak with the staff of the SEC. The SEC chair says the commission is ready to accommodate discussions on issues they may be having with aligning with regulations. At the moment, it seems like the relevant companies are ready to comply, but the SEC is yet to set clear requirements.
The SEC has been largely unresponsive to request for clarity. Recently a member of the house, Representative Tom Emmer, took to Twitter to express his dissatisfaction. It becomes difficult to decipher how institutions are faring in communicating with the commission if elected officials have trouble doing so.
The cryptocurrency industry’s growth is being stifled by the continuous threats to restrict various key areas of the industry by the SEC. Many interested investors cannot engage the market as there are no clear guidelines. The investors suffer too.