The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has stressed the importance of bringing “intermediaries and issuers of crypto securities” into compliance. In addition, the U.S. Treasury Department’s Financial Stability Oversight Council (FSOC) has recommended that regulatory agencies continue to “enforce existing rules and regulations applicable to the crypto-asset ecosystem.”
SEC Chair Gensler on Crypto Regulation
SEC Chairman Gary Gensler talked about crypto regulation Friday in his remarks before the U.S. Treasury Department’s Financial Stability Oversight Council (FSOC). Gensler said:
Nothing about the crypto markets is incompatible with the securities laws. Yet risks from this speculative, volatile, and what I believe is a largely noncompliant market put investors at risk.
“This is why bringing intermediaries and issuers of crypto securities tokens into compliance is so important,” he stressed.
“While the risks from the crypto markets generally do not appear to date to have spread to the traditional financial sector, we must remain vigilant to guard against that possibility,” the SEC chief concluded.
Gensler and the SEC have been criticized for not preventing the collapse of crypto exchange FTX given that SEC staff, including the chairman himself, had several meetings with former FTX CEO Sam Bankman-Fried (SBF). The securities watchdog finally charged Bankman-Fried and his crypto exchange with fraud last week after he was arrested in the Bahamas. U.S. Congressman Tom Emmer has called on Gensler to testify before Congress about the cost of his crypto regulatory failures.
Financial Stability Oversight Council’s Crypto Regulatory Recommendations
The Financial Stability Oversight Council also unanimously approved its 2022 annual report Friday. In his remarks, Gensler said he supported the FSOC report, including its recommendations. According to the announcement about the report by the U.S. Treasury Department:
The Council emphasizes the importance of agencies continuing to enforce existing rules and regulations applicable to the crypto-asset ecosystem.
Noting that the Council has identified gaps in the regulation of crypto activities, the Treasury explained that in addressing these gaps, the Council has recommended “the enactment of legislation providing for rulemaking authority for federal financial regulators over the spot market for crypto-assets that are not securities.” Furthermore, the Treasury noted: “Steps should be taken to address regulatory arbitrage since crypto-asset entities offer services similar to traditional financial institutions but do not have a consistent or comprehensive regulatory framework.”
Last week, two U.S. senators, including Elizabeth Warren (D-MA), introduced a bipartisan bill for the regulation of cryptocurrency. Their bill, titled “Digital Asset Anti-Money Laundering Act,” is “the most direct attack on the personal freedom and privacy of cryptocurrency users and developers we’ve yet seen,” according to crypto advocates.
What do you think about the comments by SEC Chair Gary Gensler and the recommendations by the Financial Stability Oversight Council? Let us know in the comments section below.