Thoughts on Crypto Rules Get Further Defined by SEC

7/15/2022

Markets

0 min read




Image: Yahoo News (July 14, 2022)

SEC Claims Authority Over Cryptos and Says Revised Securities Law Could Apply

During an interview this week, Securities and Exchange Commission (SEC) Chairman Gary Gensler covered several cryptocurrency-related topics and shared for the first time how the Securities regulator may define its authority and deal with a myriad of digital-asset issues and concerns. Gensler assured the interviewer and listeners that the regulator does have broad enough powers from Congress to institute changes to protect the public involved in the asset class. His statement about authority seems to give a nod to a recent Supreme
Court ruling related to the FDA but impacting all agencies created through Congressional legislation.

During the interview, which was streamed on Yahoo Finance, Gensler said that the Commission may exempt parts of securities law in order to help companies involved in cryptocurrency fall into compliance. He referred to other examples where this has been done. The Chairman insisted that there are many non-compliant companies offering crypto, which he views
as securities. Although the SEC Chairman views the digital assets as securities, other regulators, such as the Commodities Futures Exchange (CFTC) have treated them differently. The two oversight bodies have been at odds over cryptocurrency since even before Chairman Gensler was appointed.

Security and Exchange Commission Oversight

Source: SEC.gov

The SEC has targeted several crypto companies, accusing them of conducting unregistered securities sales. The most high-profile case is with fintech firm Ripple, which is to be settled soon. Victory for Ripple would set a precedent that would almost certainly buoy the beaten-down cryptocurrency sector.

In March, the Executive branch issued an Executive Order for federal agencies to “play a leading
role in international engagement and global governance of digital assets consistent with democratic values and U.S. global competitiveness.”

Very little headway has been made since then and crypto legislation is unlikely to be passed this year. It is an election year, and digital assets are more of a political issue than they may seem. Several politicians and bankers are proponents of fostering the innovation that could make the country a fintech hub, which is what the industry advocates want. And others look for a heavy-handed crackdown on the U.S.

Paul Hoffman

Managing Editor, Channelchek

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