US SEC’s Chairman Meets Treasury Department’s Council
Securities & Exchange Commission’s (SEC’s) Chairman, Gary Gensler, was called upon by the Financial Stability Oversight Council (FSOC) of the Treasury Department. He was specifically asked to explain the SEC’s plan for regulating cryptocurrencies.
Gensler appeared before FSOC on Friday and apprised the Council that cryptocurrencies cannot be regulated under the existing Securities laws. He argued that the crypto industry in particular is incompatible with the legislature.
However, he acknowledged that the crypto industry is enormously volatile and has immense potential of exposing investors to severe risks.
Gensler suggested that considering the risks, it is vital to bring crypto issuers as well as intermediaries under strict compliance and supervision.
He remarked that though the crypto industry doesn’t pose any near-future threat to the conventional sector, yet ‘SEC must stand guard and shouldn’t underestimate’ it.
SEC’s Chairman Condemned for Not Fulfilling Responsibilities
It may however be noted that SEC under Gensler’s control has been actively criticized from all quarters, particularly the political.
SEC’s Chairman was recently criticized by prominent lawmakers who held him responsible for not laying down crypto regulation.
He was also accused of offering assistance to defaulted FTX when he held various official meetings with the firm’s departed CEO.
Eventually, SEC had to take enforcement action by leveling fraud allegations against the firm and its CEO. Resultantly, the firm’s CEO, Sam Bankman-Fried was apprehended in the Bahamas.
Gensler was even called upon by Senator Tom Emmer to explain why SEC couldn’t describe crypto regulations before Congress.
Recommendations towards Regulating Crypto Given By FSOC
On the same day when Gensler showed up before the Council, FSOC passed its annual report for the year 2022.
SEC’s Chairman applauded the report and appreciated the recommendations offered by FSCO with regard to crypto regulations.
In its recommendations, FSCO recommended that supervisory authorities should continue to execute strict regulatory actions for ensuring compliance by the crypto industry.
Furthermore, FSCO also identified the loopholes and lacunas in crypto regulation. FSCO furthermore provided the way forward how to remove such loopholes.
Difference between Currency and Securities Important
It suggested that for efficient implementation of legislation, crypto demarcation should be made in which the difference between currencies and securities be determined.
Thereafter, regulatory rules for cryptocurrencies and crypto securities should be laid down separately, advised FSOC.
FSOC also acknowledged that crypto companies offer more or less the same services as are being offered by financial institutions.
Lack of Proper Regulations
The Council then noted that while financial institutions are comprehensively governed and regulated, yet the crypto industry remains mainly unregulated.
It, therefore, insisted that a proper regulatory framework should be put in place. This is something that the SEC has been demanding for a long time.
Still, there are many aspects that are yet to be touched upon and discussed when it comes to the regulations of cryptocurrencies.
It may be noted that a week ago, Senator Elizabeth Warren, in collaboration with two Senators, presented a bipartisan crypto bill.
Senator Warren’s Bipartisan Crypto Bill
The bill however received a lot of criticism firstly over its title and secondly with regard to its contents.
The bill was reportedly named as “Digital Asset Anti-Money Laundering Act”. It was argued by many that the title of the bill bears the impression of ‘an industry of money laundering’.
Legislature was criticized for not making an attempt in regulating industry but attacking the privacy and freedom of those associated with it.
Some within the crypto community claimed that it was the worst legislature they had ever seen.
It is true that people have developed their own perceptions and understandings when it comes to cryptocurrencies. Many think that cryptocurrencies are used for nothing else but money laundering.
This is the reason why even the bill presented was not able t discern the cryptocurrencies and the money laundering assets.