Washington — According to Hester Perth of the Securities and Exchange Commission, the United States has dropped the ball into cryptocurrency regulation, and she says the knock-on effect of its failure keeps her at night.
“Because this space is a hot area right now, there are a lot of scams,” Perth told CNBC as a bystander at this week’s DC Blockchain Summit. “Another factor that concerns me is how to drop the regulatory ball.”
She goes on to say, “We do not allow innovation to develop and experiment in a healthy way, and there are long-term consequences of its failure.”
Comments come as the crypto market continues to collapse.
Partly due to the turmoil in a subset of cryptocurrencies called Stablecoin, the widespread sale of digital assets has wiped out more than $ 5 trillion from the entire market in a matter of weeks.
The name comes from the fact that these digital currencies are specially designed to stabilize and are fixed in price to real-world assets such as commodities such as gold and fiat currencies such as the US dollar. increase. Stablecoin price fluctuations shouldn’t fluctuate much, so it’s hardly worth mentioning. But the collapse of UST — one of the most popular US dollar peg stablecoins — Had a contagious effect Throughout the crypto ecosystem. These shock waves also ignited under lawmakers and regulatory agencies.
“We can chase scams and play a more active role in the innovation side, but we need to reach that. We need to get to work,” Perth said. It is.
“So far, we have never seen us willing to do the job.”
The SEC’s job description for cryptocurrency regulation is indeterminate.
Wall Street’s top regulatory agencies oversee securities, and until recently it was difficult to determine which securities to identify with Chairman Gary Gensler. Over 19,500 ciphers It is under his jurisdiction, as opposed to commodity tokens, which should be left to law enforcement agencies of the Commodity Futures Trading Commission.
but, Recent testimony at the House Expenditure CommitteeGensler provided some clarity, saying that the SEC has “perhaps a huge number” of jurisdiction over the cryptocurrencies in circulation. The SEC chief also acknowledged it Bitcoin “Maybe” wasn’t within that range — it was a strong word for him on this subject.
Gensler’s recent views on Bitcoin’s regulatory jurisdiction run in parallel with former SEC chief Jay Clayton. Said before The cryptocurrency is a “sovereign currency alternative” and “if you replace the dollar, euro and yen with Bitcoin … that type of currency is not security”.
Over the past few months, the SEC has strengthened its roster and expanded its authority over digital asset regulation.
During aprilGensler said, Wall Street’s top regulators are planning to register and regulate crypto platforms, and earlier this month, Agency announcement It almost doubles the staff responsible for protecting investors in the crypto market — putting their crypto assets and cyber teams in up to 50 dedicated positions.
“Cryptocurrency exchanges need to come in and register, or frankly, we will continue to bring and use what Congress has given us to our enforcement and inspection functions. That’s what Capitol Hill’s Gensler continued.
Gensler recently told Congressman that the rules were “in fact very clear.” According to the SEC chair, if you are raising money from the public and the public expects profits based on the efforts of their sponsors, it is safe. Gensler states that unlike a product, there is no issuer and no public buyer expects a return based on the efforts of a single party behind the product.
However, many participants will welcome a clearer opinion from the legislators. SEC Perth tells CNBC that the SEC is already acting with that authority, but “Parliament has come and said,” SEC, this is the role you think you should play. CFTC, this is the role for you. . “” “
“If we decide to set up a federal regulator, we can argue that the SEC will be a good regulator of retail exchanges, but again, it’s up to Congress to make that call.” Mr Perth continued. Traditional financial institutions want to get involved in cryptocurrencies, so work that should be done within existing authorities. “To do that, we need to clarify the regulations.”
Senator Cynthia Lummis (R-Wyo.) And Kirsten Gillibrand (DN.Y.) Present a comprehensive framework for regulating the crypto industry, among regulators such as the SEC and CFTC. It aims to provide that clarity in a bill that divides surveillance. Lummis tells CNBC that he wants the blueprint for this regulation on digital assets to “become a sweet spot between clear and understood regulations and not hinder innovation.”
However, dynamic remains enforceable until Congress passes some strict rules on how to regulate cryptography.
Since the SEC launched a unit dedicated to crypto asset monitoring in 2017 Brought over 80 enforcement measures against the provision of crypto assets and the platform..
An agency proceeding against Ripple, a San Francisco-based startup, could be a court battle.
In 2020, the SEC claimed: Ripple, its CEO Brad Garlinghouse, and the chairman of the company violated securities law when they sold $ 1.4 billion worth of securities. XRP, The 6th largest cryptocurrency in the world. According to CoinGecko, XRP has fallen by 42% in the last 30 days as sales sell out.
Ripple says the token is not security. As a result, there continues to be confusion about which digital coins fall into which regulatory bucket.
At some point, the ambiguity extended to ether, the world’s second-largest cryptocurrency by market capitalization. In 2018, the director of the SEC said: “The Ethereum network and its decentralized structure, Ethereum’s current offers and sales are not stock exchanges.”
How Ripple’s court battle will take place may be a sign of the future, forcing the SEC to define which of the nearly 20,000 crypto tokens are under its jurisdiction. There is sex.