SEC Needs More Authority to Prevent Crypto from Falling Between Regulatory Cracks: SEC Chair
In a letter to Senator Elizabeth Warren, Gary Gesler targets DeFi and stabelcoins and said more resources are needed to protect investors in this growing and volatile sector.
US Securities and Exchange (SEC) Chairman Gary Gensler sent a letter to Senator Elizabeth Warren, which she released this week, responding to her inquiry regarding the SEC’s authority to regulate crypto platforms.
“Right now, I believe investors using these platforms are not adequately protected,” wrote Gensler in the letter and reiterated that they should focus on crypto trading, lending, and DeFi platforms and work together with Congress, the Administration, and fellow regulators. Warren said in a statement,
“I’m glad SEC Chair Gensler agrees and has directed the SEC to use its full authority to address these risks, and that he has also identified where additional regulatory authority may need to be granted by Congress.”
Warren is a member of the Senate Banking Committee and chair of its Subcommittee on Economic Policy and has also called on the Financial Stability Oversight Council to use its authority to regulate cryptocurrencies.
In the letter, Gensler detailed that the American public is buying, selling, and lending crypto on both centralized and decentralized platforms that can implicate the securities laws and, in some cases, even the commodities laws and banking laws.
“I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight.”
He noted that the test to determine whether a crypto asset is a security, the Howey test, is “clear,” and the agency has brought dozens of actions in this area and hasn't yet lost a case.
“I’ve urged staff to continue to protect investors in the case of unregistered sales of securities.”
The letter primarily reiterated what Gensler said earlier this month at the Aspen Security Forum. Once again, he pointed to the rise of the stablecoins embedded into the crypto system and may seek to sidestep a host of public policy goals connected to the traditional banking and financial system.
He also pointed out how, unlike traditional markets, in crypto, investors trade without an intermediary 24 hours a day, 7 days a week, from around the globe.
“I believe we need additional authorities to prevent transactions, products, and platforms from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector.”
SCOOP: @JoeBiden Admin at war with itself over regulating $2 trillion crypto biz; @SEC_Enforcement vs @CFTC and possibly @CFPB engaged in jurisdictional turf war w @ewarren aiding the SEC to get additional powers from Congress more now @FoxBusiness @TeamCavuto
— Charles Gasparino (@CGasparino) August 11, 2021
This comes amidst the $1 trillion infrastructure bill with crypto tax provisions passing the Senate without the amendment that excludes miners, stakers, validators, and developers, required to report to the IRS, and is now moving to the House. Jerry Brito, executive director of CoinCenter, said,
“The House is currently in recess and not scheduled to come back until Aug. 23 (tho they could be called back sooner). We're taking a minute to regroup and begin coordinating with members who are supportive of our effort.