Following the publishing of the testimony by the American Securities and Exchange Commission (SEC) chief Gary Gensler, the Cryptoverse is arguing that the regulator could be set out to close the curtain on (nearly) all crypto exchanges, unless they register with them – except possibly those who offer bitcoin (BTC) and ethereum (ETH) exclusively.
Gensler is set to appear before the US Senate Committee on Banking, Housing, and Urban Affairs today, ahead of which his testimony has been made available to the public.
“Frankly, at this time, [crypto is] more like the Wild West or the old world of “buyer beware” that existed before the securities laws were enacted,” Gensler remarked. “This asset class is rife with fraud, scams, and abuse in certain applications.”
To protect investors in the crypto market, there are “a number of projects” that the SEC is eyeing, including crypto trading and lending platforms, the offer and sale of crypto, custody, investment vehicles providing exposure to cryptoassets/crypto derivatives, and “stable value coins.”
Many platforms have numerous tokens on them, and “the probability is quite remote that, with 50, 100, or 1,000 tokens, any given platform has zero securities, the Chairman said, adding:
“Make no mistake: To the extent that there are securities on these trading platforms, under our laws they have to register with the Commission unless they qualify for an exemption.”
In respect to this, as well as to a broader set of policy frameworks, said Gensler, the SEC is working with the Commodity Futures Trading Commission (CFTC), the Federal Reserve, Department of Treasury, Office of the Comptroller of the Currency, and others.
And the Cryptoverse has so far seen these statements as quite threatening towards the crypto exchanges in the US, with Partner at Hogan & Hogan, Jeremy Hogan, opining that what Gansler’s words mean is that exchanges are selling what the SEC finds are securities, and that they’re coming after these companies without “warning shots or ‘clarification’ first.”
“I don’t think the markets have fully understood the implications of Gensler’s statement,” argued tax and fintech lawyer Arturo Portilla, stating:
“There are only 2 cryptos US exchanges may feel comfortable with: BTC & ETH. Listing ANY other crypto could convey the need for the exchange to register before the SEC.”
A number of other commenters also took Gensler’s statements as meaning that the regulator is coming after altcoins and “shitcoins,” as some stated. Certain commenters are arguing that many altcoins are indeed scams or securities, and that the SEC would be justified in shutting these down.
Counterarguments offered here are that it should be regulation for all or none: altcoins can’t be regulated while BTC and ETH remain outside the SEC’s reach.
Others added that the law itself is the problem, or the lack of clarity to be precise, as registering would not be an issue were there clarity of law. Meanwhile, crypto trader and economist Alex Krüger argued that the technology and regulations need to adapt to each other.
And while some wondered if the markets would really react to a decision by a US regulator, others argued that coins could simply be listed from another country.
That said, there are those who find that many other countries could follow the US’ example.
Another thing that caught the Cryptoverse’s eye is the mentioning of “stable value coin.” This too, some say, may be a way towards heavy crypto exchange regulation, as well as a way to control the narrative.
“Whoever came up with “stable value coin” needs to get a raise, then quit & come buidl in crypto,” tweeted Crypto Law Review. “They’re not only talking abt fiat-pegged “stable”coins — they’re also aiming for the grand prize: commodity-backed crypto with full deniability. Talk abt narrative control.”
And while Gensler did invite platforms and projects to “come in and talk to us,” some commenters are saying that companies have tried and got burned. Specifically, Ripple is mentioned here, as SEC is still in a long and hard battle with the company, having brought charges against Ripple executives, alleging that they had “knowingly” sold XRP as an “unregistered security.”
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