Crypto regulation could be set to come to a head in the United States:
- The Securities and Exchange Commission (SEC) Chairman Gary Gensler said his agency had “robust authorities” to regulate the crypto sector “broadly,” adding that the SEC is “going to use them.”
- At the same time, Acting Comptroller of the Currency Michael Hsu compared current developments in the crypto industry with “the fool’s gold rush” in 2008.
- Meanwhile, America’s biggest crypto exchange is hoping to steal a march on regulators – by issuing its own proposals for policing the sector.
In a video interview with the Washington Post, Gensler likened stablecoins to gambling tokens, stating that “Stablecoins are acting almost like poker chips at the casino gaming tables.”
He stated that without more regulation “people” would “get hurt.”
The Chairman continued:
“I don’t think it’s a good idea to wait until there’s a spill in Aisle 3. […] I think there are just a lot of warning signs and flashing lights that we might have a spill on aisle three and I’d rather get ahead of it.”
And his opinion on the wider crypto sector was no more upbeat. Gensler stated:
“History tells us that private forms of money don’t last long.”
The ears of altcoin fans, in particular, may have pricked up when Gensler stated that he doesn’t think that “there’s a long-term viability for five or six thousand private forms of money. History tells us otherwise.”
Gensler referred to American experiments with private money in the so-called “wildcat banking era” (also known as the “free banking era”) in the period 1836 to 1865.
He remarked that “This all had a lot of cost, a lot of problems.”
In a Wall Street Journal article, the SEC chief was quoted as stating that he “doesn’t see much long-term viability for cryptocurrencies.”
However, Gensler conceded in the Washington Post interview that distributed ledger technology had been a “catalyst for change” in the wider financial sector and could lead to “enhanced payment systems” and mainstream “decentralized lending.”
On Reddit, one commenter remarked:
“I note that [the SEC] can’t be bothered to go after Wall Street and fatcats. But nope, going to attack bitcoin (BTC) and altcoins. A very telling kind of priority.”
Meanwhile, in a speech earlier this week, the Acting Comptroller of the Currency said that “It feels like we may be on the cusp of another [financial crises] with cryptocurrencies (crypto) and decentralized finance (DeFi).”
“The 2008 crisis holds lessons that can help industry and regulators chart a better path and avoid repeating the mistakes of the past,” he said, admitting that “crypto/DeFi is able to pose a threat to the status quo because many people feel ignored, taken for granted, or exploited by banks.”
Hsu suggested that “financial innovation should be anchored in purpose,” adding that “it is difficult to see how the current set of activities” in “crypto/DeFi” is increasing financial inclusion.
“How is money being made and lost in crypto/DeFi? For the industry to grow in a responsible way, there needs to be a straightforward way to answer this question,” he added.
Meanwhile, the Acting Comptroller of the Currency also mentioned Bitcoin (BTC), saying that “The origin story of bitcoin, captured in the beautifully written eight-page paper by the pseudonymous Satoshi Nakamoto, talks about protecting buyers and sellers from fraud, making possible “small casual transactions,” and building a system that allows willing parties to transact “without the need for a trusted third party.”
And while regulators are sending their own signs, America’s only stock market-listed crypto exchange, Coinbase, is set to preempt regulators by launching its own regulatory proposals “at the end of this month or early next month.”
Speaking to Tech Crunch, Coinbase CEO Brian Armstrong stated that regulators had asked to see a “draft or proposal […] about how [crypto] could be regulated federally.”
But Armstrong said that regulators needed to show a “willingness to engage with private enterprise” if they hoped to ensure a mutually beneficial solution.
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