On Tuesday’s video conference with members of Congress that took place, Gary Gensler, Chairman of the US SEC, has stated that the regulator has no plans to ban cryptocurrency in the United States.
During a four-hour hearing, Gensler fielded questions about cryptocurrency, stablecoins, the regulation of exchanges, and decentralized finance (DeFi).
In response to Representative Member Ted Budd, who drew attention to China’s ban on crypto transactions last month, Gensler stated that the US Securities and Exchange Commission has no plans to ban cryptocurrency.
In particular, Gensler claimed the US’s “approach is really quite different” from that of China. “It’s a matter of how we get the cryptocurrency field within the investor-consumer protection that we have,” Gensler said regarding the SEC’s own duties. He also noted that other departments are confronting issues around anti-money laundering, tax compliance, and financial stability issues.
Further, Gensler added that restricting cryptocurrency to make way for a government-backed digital currency “would be up to Congress.” He noted that the SEC is only able to work with the authority that it has been given.
Historically, the US SEC has regulated cryptocurrencies that can be classified as securities – a category that includes most new tokens that are sold by companies as part of an ICO or other offering. The SEC views these assets as posing a risk to investors. Thus, the SEC has low interest in regulating long-established cryptocurrencies with no initial sale like Bitcoin.
Recent Gensler’s and Federal Reserve Chair Powell’s reassurances provided further fuel for the ongoing Bitcoin rally.
At a September oversight hearing before the Senate Committee on Banking, Housing, and Urban Affairs, Gensler has delineated a framework for bringing cryptocurrencies into the US regulatory regime. ETF constitution and custody rules are being prepared. There remains a large separation on the details, such as: what constitutes a security and which tokens rightly deserve exemptions, how should US crypto ETFs be constituted, and even if participating in proof-of-stake validation is an investment contract.
Although, despite these debates, fear and doubt are abating as the regulatory path forward crystalizes. As clarity grows, there is broader and deeper institutional and retail participation in the crypto space, which particularly increases demand for Bitcoin and the other large caps such as Ethereum.