Speaking at the House Financial Services Committee hearing on Oct. 5, the SEC chief stated that the agency has no plans to follow China’s lead and impose an outright ban on crypto. “That would be up to Congress,” he added.
Late last month, Andreessen Horowitz partner Katie Haun said following in China’s footsteps would be very bad for the U.S.
At the same committee hearing last week, Federal Reserve Chair Jerome Powell echoed the sentiment stating that the central bank had no plans to ban crypto.
Congresswoman Maxine Waters, who chaired the committee, commented that the SEC has been presented with historic challenges following “the incredible growth of unregistered and volatile cryptocurrency assets, as well as the emergence of cryptocurrency intermediaries, market exchanges, and decentralized protocols.”
Consumer Protection Priority
Responding to questions from Congress, Gensler stated that “It’s a matter of how we get this field within the investor consumer protection that we have, and also working with bank regulators and others.”
The concern is whether the Treasury department can encompass crypto within anti-money laundering and tax compliance frameworks.
The SEC may harp on about protecting consumers, but its recent actions against Coinbase and Ripple could well end up costing token holders, or “consumers” in its terminology, billions of dollars should the industry be negatively impacted.
Representative James Himes asked him to provide guidance on the subject of cryptocurrency regulation, and Gensler reiterated his previous position. Digital asset exchanges would need to register with the SEC, and decentralized exchanges (DEXs) would also be subject to regulations, he explained.
“Even in decentralized platforms – so-called DeFi platforms – there is a centralized protocol. And though they don’t take custody in the same way, I think those are the places that we can get the maximum amount of public policy.”
Concern Over “Poker Chips”
Gensler also reiterated concerns over stablecoins, which he has previously labeled casino poker chips, stating “the financial stability issues that stablecoins could raise” would be a priority for the SEC.
“The $125 billion of stablecoins we have right now are like poker chips at a casino. I do think that if this continues to grow – and it’s grown about tenfold in the last year – it can present those systemic wide risks.”
The issuer of the world’s second-largest stablecoin, Circle, reported yesterday that it had been subpoenaed by the SEC.
Featured Image Courtesy of the Globe and Mail