Original title: "Is the new chairman of the US SEC still a "friendly army" in the encryption industry?" ", by Kyle
On August 3, Gary Gensler, the new chairman of the U.S. Securities and Exchange Commission (SEC), sent a signal to strengthen supervision of the cryptocurrency field. He likened the current cryptocurrency industry to the "Wild West," where hype and fraud abound, and regulators lack adequate investor protection mechanisms.
Gensler emphasized the SEC's most important mission, which is to protect investors. He said that some of the crypto tokens, many of which are offered and sold as securities, are subject to securities laws and must operate within the securities regime. This is also the current SEC's main regulatory means for the cryptocurrency industry.
The new chairman of the SEC, who took office in March this year, has shown a sharp regulatory style. Because he taught blockchain and cryptocurrency-related courses at the Massachusetts Institute of Technology, the outside world once regarded him as a "friendly army" in the encryption industry. Today, that illusion has been shattered.
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SEC's study on cryptocurrency regulation includes DeFi
The attitude of Gary Gensler, the new chairman of the US Securities and Exchange Commission (SEC), towards the encryption industry has been closely watched. At the Aspen Security Forum (Aspen Security Forum) held on August 3, the official who became the chairman of the SEC in March this year made his first public statement on the cryptocurrency industry with the theme of "cryptocurrency and national security". the opinion of.
Gensler believes that at present, the United States does not have sufficient investor protection mechanisms in terms of cryptocurrencies. and abuse, and in many cases investors do not have access to rigorous, reciprocal and complete information. Therefore, the SEC will use its power to regulate the cryptocurrency market to the maximum.
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SEC Chairman Gary Gensler
In fact, linking cryptocurrencies to securities and regulating cryptocurrencies in accordance with the relevant regulations of the securities law is a regulatory method that the SEC has long tried.
In December, the SEC announced a lawsuit against Ripple Inc. and two of its executives, alleging they raised more than $1.3 billion in an unregistered, ongoing offering of digital asset securities. Its so-called "digital asset securities" are exactly the mainstream encrypted asset XRP in the currency circle. The SEC believes that XRP is issued and sold by a centralized company and is a security, but Ripple has not registered their quotations and sales of XRP, nor has it obtained any registration exemption, which violates the registration requirements of the federal securities law.
In public speeches, Gensler has repeatedly stressed the importance of protecting investors. He revealed that the SEC is studying at least seven areas of the cryptocurrency market, including DeFi, trading platforms, and stablecoins.
Although DeFi is named decentralized finance, hacking and fraud incidents often occur in this field. Gensler pointed out that DeFi lending may fall under the supervision of the SEC because it usually provides a specific interest rate return. He also said platforms that pool crypto assets could resemble mutual funds, meaning the SEC could regulate them.
When it comes to the regulation of trading platforms, Gensler said that these platforms have significant gaps in investor protection. While many overseas platforms claim they do not serve U.S. investors, there have been allegations that the U.S. public can still buy and sell cryptocurrencies on these exchanges. “There is no doubt that if there are securities on these trading platforms, they must register with the Commission under our laws unless they qualify for an exemption.”
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Strict regulatory attitude breaks optimistic expectations
It is worth noting that at the Aspen Security Forum, Gensler also specifically called on Congress to give the SEC more authority and resources to regulate the cryptocurrency industry in order to prevent transactions, products and platforms from falling into regulatory loopholes. That conveyed his intention to step up regulation.
Gensler's harsh regulatory style towards the encryption industry has broken many people's illusions about him. When he was the chairman of the SEC, some people thought that because of his academic background in the encrypted asset industry, he might be more open to regulation in this area. But at present, Gensler cannot be regarded as a "friendly army" in the encrypted asset industry.
Gensler has a rich life history. He worked at Goldman Sachs for 20 years. During the Obama administration, he was hired as the deputy secretary of the Treasury Department, and then served as the chairman of the US Commodity Futures Commission. The Massachusetts Institute of Technology teaches courses related to blockchain and cryptocurrencies.
According to reports, Gensler is teaching the course on the development of bitcoin and the impact of blockchain on the financial industry. At a blockchain business summit in 2018, Gensler also said that blockchain technology has the real potential to change the financial world; although there are still many technical and business challenges to be overcome, this innovation can reduce the financial system Costs, Risks, and Economic Rents. "I'm an optimist and want to see this technology succeed."
These statements once made the outside world think that after Gensler took the helm of the SEC, the department is expected to approve a Bitcoin ETF for the first time. But it is clear that Gensler is now in his position and can only do his own thing. As the chairman of the SEC, his primary responsibility is to control the securities industry and protect investors, not to develop the blockchain.
In an interview with Bloomberg on Aug. 4, Gensler once again stressed that his extensive background in blockchain and cryptocurrencies does not mean he will make any concessions for the nascent industry. He said that while he was neutral and even "curious" about the technology, protecting investors from fraud was more important.
According to statistics, 11 institutions have submitted the S-1 form of the Bitcoin ETF application to the SEC, among which VanEck Bitcoin Trust submitted the application first, and the SEC began the review process on March 19 this year. But in May and June of this year, the SEC announced twice that it would delay making a decision and hoped to solicit further public comments. According to the requirements, the SEC needs to make a final decision on the application before November 14 this year.
Judging from Gensler's current statement, he will focus more on protecting investors, including exploring the regulation of cryptocurrencies and DeFi. In this case, the SEC may be particularly cautious when facing bitcoin ETFs with higher investment risks.
At present, not only the United States, China, Canada, the United Kingdom and other countries have also strengthened the supervision of the cryptocurrency industry. In the opinion of some industry insiders, stricter supervision is not a bad thing in the long run. As the regulatory rules become clearer, relevant practitioners can also find a way to develop in compliance, so as not to "cross the river by feeling the stones" ".
Gensler echoed a similar sentiment: "For those who want to encourage innovation in cryptocurrencies, I would like to point out that, throughout history, financial innovation has not flourished outside of our public policy framework. Finance is at its core trust, and markets At the heart of trust is investor protection. If this area is to continue, or fulfill its potential to be a catalyst for change, we better incorporate it into the public policy framework.”
