US SEC boss, Gary Gensler, has never shied away from reiterating the need for more regulatory oversight functions on the crypto industry. He has revealed that the agency plans to pile in more pressure to ensure that the crypto industry, particularly crypto exchanges, is more regulated this year.
Crypto Exchanges And Increased Regulatory Oversight
Gensler emphasized that increased regulatory function over the crypto industry is one of the main focuses of the top financial watchdog this year. He claimed that this increased regulatory oversight would protect crypto investors from losing their investments the same way stock investors are being protected from charlatans in the stock market space.
Speaking at a recent virtual meet, Gensler said, “I’ve instructed our workers to seek every possible means in which investors can be protected on these platforms.” He also said, “it would not be in the investors’ best interests if these trading platforms aren’t regulated this year again.”
Proper Regulation Will Fuel More Institutional Investments – FTX CEO
Gensler has been at the forefront of ensuring proper regulation of the crypto industry since he was appointed SEC chairman early last year. Last month, Gensler stated that the agency wouldn’t mind having a cordial meeting with exchanges on the best approach to make these exchanges comply with regulatory procedures, including a dialogue on the best way to protect investors in the crypto space.
Some industry heavyweights have shared their opinions on the matter. FTX CEO and Founder, Sam Bankman-Fried, predicted that proper regulation for the crypto industry (within and outside the US) would not exceed this year. He also remarked that such regulation would be in the best interest of the crypto industry as it will attract more institutional investment into the crypto industry.
Public Comment On Crypto Regulation Is Necessary – SEC Advisor
A member of the SEC advisory committee, J.W. Verret has opined that the best way the financial regulator can achieve its regulatory objectives over the crypto industry is to seek public opinions regarding the matter. Verret, who has already written a formal letter to the SEC office regarding his proposal, stated that public opinions would form the basic foundation for the agency to build its regulatory framework for the crypto industry.
The associate professor of law further said that the SEC’s definition of securities is ambiguous. A clampdown on tokens that the SEC doesn’t consider as Securities might lead to various litigations from investors in such tokens, including him, who has investments with several layer-1 and -2 tokens on leading exchanges.
Expressing his worry, Verret said, “the SEC’s investors’ protection mission might mean a significant loss in some of my digital asset portfolios due to a clampdown on tokens where I have investments.”
Even though the SEC uses the 1940 Howey test to assess whether assets can be categorized as security, Verret claims that this test is unclear regarding the current situation. More importantly, there is a provision for the amendment of this test which the last few SEC bosses didn’t consider. The SEC is yet to respond to Verret’s claims and letter as of this writing.