Gary Gensler gave the much-needed assurance to a House hearing that a crypto ban is not on the cards.
No Ban Planned
Gary Gensler, Chair of the US Securities and Exchange Commission (SEC), confirmed that regulators are not contemplating a ban similar to China. Gensler told The House of Financial Services on October 5th that there are no plans to ban crypto but emphasized the need for tokens that meet the definition of securities to be regulated.
Gensler told the House that the authorities’ focus is the investor and consumer protection rules, anti-money laundering regulations, and tax laws. Congressman Tom Emmer, in a scathing remark during the hearing, retorted:
"Your job, the SEC’s mandate is to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation. When you make conclusory public statements and regulate (sic) enforcement actions, you jeopardize that mandate. "
Lately, the SEC has taken a tough stance against players in the crypto space leading to speculation that a crypto ban may be in the pipeline. Gensler reiterated the same position taken by Jerome Powell, the Chair of Federal Reserve (Fed), last month.
The Hearing on Tuesday focused on a few areas of concern, including the enforcement actions and statements made by the SEC against certain crypto platforms. The SEC has been openly rebuked by many players in the crypto market for classifying most crypto assets as securities.
The crypto industry received the much-needed assurance from the regulators that the US will not take the same path as China did with its crypto industry. In September, China widened the crypto ban to include all crypto transactions and mining of crypto assets, tumbling the entire crypto market.
The aggressive regulatory crackdown in China started in June when enforcement agencies shut down Bitcoin mining facilities in Sichuan. This resulted in a massive drop in the hash rate but has since recovered.
However, banning cryptocurrencies would be difficult, if not impossible, given the nature of crypto assets. It becomes even tougher when institutions have been granted permission to trade and offer crypto-related services by relevant authorities.
Gensler has been justifying the SEC’s tough stance against crypto players in the market with investor protection. Coinbase’s Chief Executive Officer, Brian Armstrong, has disclosed that the SEC has threatened Coinbase with legal action if it proceeds with its crypto lending product. Similar threats were also issued against BlockFi and Celsius by state security regulators.
The growth of the crypto market demands that regulators speed up efforts to introduce a regulatory framework that is comprehensive and inclusive. The SEC has correctly identified Decentralized Finance (DeFi) as an industry within the crypto sector that must be regulated. However, the market players are still left in the dark on the scope of compliance.
Unless this is prioritized and introduced in the near future, retail investors are at risk. The ongoing case by the SEC against Ripple would likely provide much-needed clarity on the definition of security. In short, a proper regulatory framework for the crypto industry is long overdue.
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