In March, Gary Gensler was appointed head of the US Securities and Exchange Commission. He has previously lectured on cryptocurrency and blockchain technology at MIT. This has led proponents of cryptocurrency to consider him a potentially good ally of cryptocurrency.
Gensler has asked Congress to pass a law that could give the SEC legal authority to monitor crypto exchanges, despite the fact that, as he says, “the SEC already has broad powers,” according to Bloomberg.
Politicians have struggled with how to react to the volatile market. Gensler is now considering establishing a monitoring regime with the aim of creating security for millions of investors who have filled their portfolios with cryptocurrency.
– Although I am neutral to the technology – even fascinated – when I spent three years diving deep into it. However, I am not neutral about investor protection. If anyone wants to speculate, then it’s their choice. Nevertheless, we have a responsibility as a nation to protect those investors from fraud, says the SEC chief.
The unregulated crypto market is estimated to be worth 1.6 trillion dollars – equivalent to more than 14,000 billion kroner. The market is at times like a roller coaster, with large fluctuations. In April, for example, a bitcoin cost over $ 64,800. By the end of May, the price had dropped to $ 30,000.
Draws parallels to the automotive industry
Gary Gensler notes that technological development, throughout human history, has been a trigger for economic progress. He believes there is a similar potential in the digital asset classes.
He envisages that economic progress goes hand in hand with well-thought-out and strict regulations, and draws parallels to the car industry:
– The car industry did not take off until the authorities laid down rules for driving. Speed limits and traffic lights ensured safe driving in the community, but it also helped to normalize cars. It is only by incorporating things into our public political goals that a technology has the opportunity to become public property, says Gensler.
Will not regulate bitcoin
Over the years, there have been major discussions about the types of digital assets that fall under the Financial Supervisory Authority’s jurisdiction. Some cryptocurrencies – such as bitcoin – are considered a currency and are considered a commodity – not a security – and thus do not fall within the Financial Supervisory Authority’s regulatory area.
However, there are thousands of other cryptocurrencies. Gensler believes most operate as unregistered securities that must comply with SEC rules.
– Finanstilsynet has a broad authority over securities. There are a number of cryptocurrencies that fall under this jurisdiction. However, there are areas, for example when trading bitcoin on crypto exchanges, where the public is very poorly protected, says Gensler.
Patrick McCarthy lectures on cryptocurrency at Georgetown University. He believes Gensler’s understanding of digital assets means that he will give the ever-growing industry a fair opportunity to speak out. However, he believes that the SEC chief may disappoint many crypto supporters.
– When the crypto people say they want legal certainty, they do not mean that they want to be regulated. They do not share that view with Gary, says McCarthy.
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