Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed concern on June 14 that new cryptocurrency legislation could undermine existing broader market rules.
The reaction was expected from a politician who fought hard to have his agency control cryptocurrencies and treat most assets the same as securities.
A new regulation bill was introduced on June 7 by Senators Cynthia Lummis and Kirsten Gillibrand, which proposes making the CFTC the industry’s primary regulator. This was supported by industry leaders and pro-innovation politicians as it would result in many assets being classified as commodities such as gold rather than securities such as company shares.
Speaking at the Wall Street Journal CFO Networking Summit this week, Gensler said Cryptocurrency should be treated the same as traditional banking and financial markets.
“We don’t want to undermine the safeguards we have in the $100 trillion capital market. Similar behavior should be treated equally.”
In response to the recent sharp decline in cryptocurrency prices, he added, “the urgency is emphasized, but the urgency was there.”
The Lummis-Gillibrand bill aims to create a complete regulatory framework for cryptoassets, led by the CFTC. However, it is unlikely that it will be passed by Congress due to the presence of a number of anti-crypto lawmakers such as Senator Elizabeth Warren.
The bill also proposes new concepts for securities laws passed almost 90 years ago. This would give some token issuers more leeway than public corporations.
Gensler said the agency was not trying to expand its jurisdiction but reaffirmed its position that cryptocurrencies are securities, adding: “These tokens are being offered to the public and the public is hoping for a better future. These are the characteristics of an investment contract.”
CFTC chief Rostyn Behnam also endorses the Lummis-Gillibrand bill, which said last week that it addresses the distinction between a commodity and a security very well.
SEC scare tactics
On June 13, Ripple General Counsel Stew Alderothy criticized the SEC, accusing the agency of trying to “intimidate, demolish, and bankrupt U.S. cryptocurrency innovation” through threats, enforcement actions, and attempts to expand jurisdiction.
“Like a hammer that wants everything to be a nail, the SEC keeps everything in a fog so that it can be argued that every cryptocurrency is a security.”
Gensler also spoke this week about how the returns offered on some crypto platforms are “too good to be true.”
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Credit : cryptopotato.com