The U.S. Securities and Exchange Commission (SEC) has urged Congress to pass cryptocurrency legislation to protect investors, the new SEC chairman has revealed. The securities regulator is also working with the Commodity Futures Trading Commission (CFTC) and the U.S. Treasury Department to combat criminal activity facilitated by cryptocurrencies, the chairman noted.
SEC Working With CFTC, Treasury on Crypto Regulation, Urges Congress to Pass Legislation
The new chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has asked Congress to take action regarding cryptocurrency legislation, he told the House Appropriations subcommittee on Wednesday.
Gensler explained to the subcommittee that there were “gaps” in the regulation of cryptocurrencies, like bitcoin and ether. Noting that there are “thousands” of cryptocurrencies in existence right now and many of them are operating as unregistered securities, he emphasized:
We’ve only been able to bring 75 actions and there are others currently that are not compliant.
Gensler stated that the most pressing issue in the regulation of the crypto space is the lack of regulatory oversight of cryptocurrency exchanges. He said that he would like to work with Congress “to bring investor protection to the platforms, where these sometimes-commodities, sometimes-securities are trading on the platform.”
The chairman proceeded to give an example of front running, where a crypto exchange could share order information, allowing an investor to trade ahead of a crypto transaction, which makes purchases more expensive for other investors. He affirmed: “Without a cop with a beat and some rules of the road, then market participants can front run your orders.”
In contrast, the chairman said that the SEC is working to protect against fraud and manipulation in traditional stock exchanges but the same protection is not in place for crypto exchanges. He emphasized that the SEC is “trying to bring the similar protections to the exchanges where you trade crypto assets, as you might expect on the New York Stock Exchange or Nasdaq.”
His statement regarding increased oversight of crypto exchanges echoes a similar statement he made at the Financial Industry Regulatory Authority (FINRA) conference last week when he said that crypto exchanges need more regulation.
Gensler further confirmed that the SEC is cooperating with the Commodity Futures Trading Commission (CFTC) and the U.S. Treasury Department to combat criminal activity facilitated by cryptocurrencies. He revealed:
They’re keenly focused on anti-money laundering and guarding against illicit activity.
Last week, the Treasury unveiled Biden’s tax proposal including requiring businesses to report crypto transactions of more than $10K to the Internal Revenue Service (IRS) as part of a broader crackdown on tax evasion. This week, Bitcoin News reported that the Biden administration is looking to increase cryptocurrency oversight to protect investors and prevent illicit transactions via cryptocurrencies. Meanwhile, federal regulators are working to come up with a single regulatory framework for cryptocurrencies as directed by the Biden administration.
While Gensler has urged Congress to take action on crypto legislation, Congressman Jim Himes recently said that his colleagues do not have a deep understanding of cryptocurrencies. Consequently, he does not expect Congress to pass crypto legislation anytime soon.
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