Updated 10 May, 2021

SEC Chairman Gary Gensler Calls for Bitcoin Regulations

SEC Chairman Gary Gensler Calls for Bitcoin Regulations

Key Takeaways:

  • Gary Gensler says Bitcoin and cryptocurrencies need to be regulated
  • The new SEC chief asks Congress to give the agency oversight of the crypto market

Newly Appointed SEC Chairman Voices Concerns Over Crypto Space

The new head of the Securities and Exchange Commission said last week that cryptocurrency investors need more protection. He said this was the case mostly when dealing with the emerging crypto industry. Gary Gensler gave his remarks on the crypto space during his testimony before the House Financial Services Committee.

The unregulated nature of the cryptocurrency market poses inherent risks for participants, Gensler said. Therefore, to prevent fraud, market manipulation and other issues, a regulatory framework needs to be imposed

“Right now, these exchanges do not have a regulatory framework at the SEC or at our sister agency, the Commodity Futures Trading Commission,” he said. “There’s not a market regulator around these crypto exchanges and thus there’s really no protection around fraud or manipulation.”

Although the new SEC chief did not describe what cryptocurrency trading regulations should look like, the crypto community is largely at ease with Mr. Gensler’s approach to cryptocurrency, trusting that he will take an accommodative stance toward the fledgling market.

The Future of The Relationship Between Cryptos & SEC

While digital asset holders have praised his appointment and hope that Mr. Gensler will open the way for mainstream acceptance, during his hearing, he gave moderate responses to cryptocurrency-related questions. He mentioned that the digital currency market “could benefit from greater investor protection.” Because Bitcoin is defined as a commodity, and not a security, by US law, he asked lawmakers to work on legislation that will give the SEC oversight of crypto trading activities.

“There’s a lot of authority that the SEC currently has in the securities space and there are a number of cryptocurrencies that fall within that jurisdiction,” Mr. Gensler said. “But there are some areas, particularly Bitcoin trading on large exchanges, that the public is not currently really protected.”

Prior to becoming the chief of the main regulator responsible to introduce guardrails to cryptos, Mr. Gensler led courses on the blockchain technology and the Bitcoin network at MIT. He also brings to the table extensive experience as a veteran regulator due to his term as the head of the Commodity Futures and Trading Commission during the Obama administration.