SEC chief shares views on cryptocurrency regulation and faces criticism
The US Securities and Exchange Commission’s (SEC) policy on cryptocurrencies has been the subject of intense debate both inside and outside the digital asset industry for at least several years. In doing so, the agency has many critics, among whom one can even find billionaires. Among them is popular investor, Dallas Mavericks sports team owner and Shark Tank host Mark Cuban. We tell you more about his position.
On the previous day Quban commented very strongly on the words of SEC head Gary Gensler in his Wall Street Journal publication. In it, Gensler argued that the crypto market does not require a separate approach to regulation, but that regulators should not define crypto as something "unique.
That, of course, sounds strange. The US financial regulatory framework is many years old, and digital coins are a new asset class. In this regard, it is ridiculous to try to push crypto into this niche, although the authorities are going to do just that.
How is the cryptocurrency market regulated?
For context, here is a translation of Gensler’s quote from an article published by news outlet Decrypt.
There is no reason to treat the cryptocurrency market differently from the rest of the market just because it uses a different technology. The US Securities and Exchange Commission will act as a “policeman”. As with seatbelts in cars, we must provide standard investor protection in the cryptocurrency market.
SEC chief Gary Gensler
That is, Gensler also hinted that regulatory rules for different markets have been in place for decades and there is supposedly no need to change them to suit cryptocurrency standards. Moreover, companies and various platforms in the industry are allegedly unwilling to follow the boundaries set by the SEC themselves. Cuban, on the other hand, said that the problem comes from the vagueness of those very boundaries. Here’s his quote.
Who should be dealt with and how? Do you need to set up any meetings? Do you use Calendly? If you understand the nature of cryptocurrencies/decentralised finance, why don’t you just publish clear rules for regulating them and leave them open for public discussion?
Billionaire Mark Cuban
Calendly is a professional platform for business-to-business appointments. It's a relatively new solution that young firms are actively using, so it's a clear hint from the billionaire about the "outdated" way of doing business inside the US Securities and Exchange Commission.
In his post, Gensler also mentioned the BlockFi platform, which previously provided loans in crypto and allowed relatively high annual yields against its coins. In February, BlockFi was forced to pay $100 million at the request of the SEC following an investigation into the platform by the regulator. Citing BlockFi’s high profitability, Gensler made the following statement.
The problem was what BlockFi did with the assets it received and what it did not do as a firm. BlockFi had not disclosed all the necessary information to investors.
Returns on some of BlockFi’s crypto deposits (before the problems with the SEC)
According to Gensler, the SEC considers these high-yield investment products to be securities that BlockFi has not registered as such.
Fortunately, there is an easy way. I urge platforms offering cryptocurrency lending services to get in touch with SEC officials. Bringing these platforms into compliance with securities laws will benefit investors and the cryptocurrency market.
Similar statements from the SEC chief have come under criticism from Cuban before. Here, for example, is a translation of one of his August 23, 2021 tweets in response to another Gensler statement.
This is such nonsense. You didn’t start this nonsense, please don’t continue with it. If you work on behalf of investors, you make their questions easier by giving them answers. But you make the process almost impossible.
Bitcoin rate chart over two weeks
Cuban himself has been a fan of cryptocurrencies for quite some time. He has shared more than once with the community about his investments and has spoken publicly in support of Bitcoin. His criticism fits well with many crypto-enthusiasts, who have been without proper regulation of the industry for several years now. Unfortunately, this has also noticeably hindered the influx of big investors into the crypto market.
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There was also some curious news: one of Argentina’s presidential candidates, 51-year-old economist Javier Milei, was found to have promoted a fraudulent crypto project called CoinX the day before. He published a post on his Instagram last year endorsing the platform, but it finally shut down in June this year.
CoinX representatives claimed that the platform could automate the trading process with a team of experienced traders and artificial intelligence. In December, Miley visited the startup’s office in Buenos Aires. In an Instagram photo, he poses with members of the CoinX team.
A photo of Miley in CoinX’s office
A few months later, things didn’t go according to plan at all for the project. Argentina’s National Securities Commission (CNV) issued a warning that the platform was not legally allowed to operate in the country and ordered it to cease operations. CoinX has also failed to pay investors their expected profits. Many of them are now claiming damages from Milei himself, as they invested in the platform based on his recommendations.
We believe that the digital asset industry does deserve a more modern approach in terms of regulation. Trying to fit coins into the framework of old laws is unlikely to end well, as such regulations are indeed outdated. So, for now, the only thing left for coin enthusiasts to do is to wait for a new legal framework to be developed. Perhaps, something like this will be seen after all.
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