The Chairman of the SEC has confirmed that the financial regulator has no immediate plans to ban crypto assets in the United States.
The U.S. SEC Won’t Ban Cryptocurrency
The noise around the crypto space often muffles the actuality that we are on the brink of something revolutionary. If everything goes well, cryptocurrencies and blockchain technology could initiate the next internet revolution.
Things are not going too well. China (motivated by its commitment to carbon neutrality and the imminent launch of the digital yuan) recently made all crypto-associated activities illegal in the country. The move stifles cryptocurrency business in the sovereign nation and drives financial innovation and mining to other friendlier countries like the United States.
Notably, there are no clear-cut regulations in the US. This has caused chaos as regulatory agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) compete over authority.
Some observers have suggested it’s only a matter of time before the U.S adopts China’s playbook and bans cryptocurrencies, especially after SEC Chair Gary Gensler recently called cryptocurrency a “highly speculative asset class”.
Gensler, less than six months on the job, however, clarified that the SEC has no intentions to ban the $2.3 trillion crypto market. During a House Committee on Financial Services hearing on Tuesday, Representative Member Ted Budd (RNC) asked Gensler whether they plan to emulate China which has been on a “warpath” with cryptocurrencies for years, and ban the asset, to which he responded with a resounding “No”. He then told the House Financial Services Committee that the SEC’s approach is different from that of China.
“It’s a matter of how we get this field within the investor-consumer protection that we have and also working with bank regulators and others — how do we ensure that the Treasury department has it within anti-money laundering, tax compliance,” the SEC boss added.
While underscoring the importance of bringing crypto assets within the investor protection scope of the SEC, Gensler posited that most of these assets are categorized as “investment vehicles”.
“A lot of these are not real currencies. They are not being used to buy a cup of coffee at Starbucks. Most of them are investment vehicles. They should be within the securities laws.”
Gensler further noted that banning cryptocurrencies in favor of a government-backed digital currency — the digital dollar — “would be up to Congress”. As of now, the SEC can only work with the authority it has been granted.
Gensler’s remarks come days after Federal Reserve Chair Jerome Powell astutely indicated that the central bank had no plans to ban or limit cryptocurrencies as China has done.
Gensler Evades Question About Bitcoin And Ether’s Legal Status
The SEC Chief also asserted that stablecoins are a priority for the agency owing to the financial stability risks that they pose. “The $125 billion of stablecoins we have right now are like poker chips at a casino. I do think that if this continues to grow – and it’s grown about tenfold in the last year — it can present those systemic wide risks,” Gensler opined.
When asked by Rep. Patrick McHenry to clarify his stance on the regulatory status of bitcoin and ethereum based on his past comments where he asserted that Ether and Ripple’s XRP should be considered non-compliant securities, Gensler vaguely answered:
“I’m not going to get into any one token, but I think that the securities laws are quite clear. If you’re raising money and the investing public have a reasonable expectation of profits based on the efforts of others, that fits within the securities law.”
The SEC infamously put forward a complaint against Ripple last December, alleging that sales of its XRP token constitute an unregistered securities offering.