US Securities and Exchange Commission (SEC) Chairman Gary Gensler has sought formal cooperation between financial authorities to effectively regulate crypto assets.
A set of rules for crypto trading
According to a Financial Times news report, Gensler said there should be a rulebook to prevent bad actors from exploiting regulatory loopholes and committing fraud and manipulation. To that end, the SEC chairman said he is working on a memorandum of understanding (MoU) between the SEC and CFTC to address potential regulatory loopholes. Gensler served as chairman of the CFTC from 2009 to 2013.
He made the remarks amid a bipartisan crypto regulation bill introduced on June 7 by U.S. Senators Cynthia Lummis and Kirsten Gillibrand. He aims to define most digital assets as commodities and advocates expanding the role of the Commodity Futures Trading Commission (CFTC) to regulate their trading.
SEC Eyes Regulatory Control
Because the SEC has aggressively lobbied to bring digital assets under its purview, deeming them to be securities and not commodities, the crypto regulation act as it stands leaves the SEC wanting a say in regulations.
“I’m talking about a set of rules in the exchange that protects all trades regardless of pair – [be it] a security token versus security token, security token versus commodity token, commodity token versus commodity token,” Gensler said, adding that this is necessary to protect investors.
Earlier on June 15, Gensler claimed before the Wall Street Journal’s CFO Network that cryptocurrencies are securities and the SEC has the right to seek control over their regulation.
“These tokens are being offered to the public, and the public is hoping for a brighter future. Those are the characteristics of an investment contract,” he explained.
CFTC says crypto is a natural fit
At an event earlier this month, Rostin Behnam, who took over as chairman of the CFTC in January 2022, hailed the bill as “very good work” that differentiates digital tokens between securities and commodities. He said crypto markets are a natural fit for the CFTC.
“Markets are markets, whether derivatives, stocks or fixed income… There is always a natural relationship between . . . Derivatives in general and cash markets,” he had said, adding that the notion that the CFTC was unfit for the job was misaligned.
To be too good to be true
At an event on June 14, Gary Gensler warned people that crypto lenders offering returns of 4.5% to 7% to consumers who deposit their money are too good to be true.
Although his remarks in the way like Celsiuswhich offered 17% APY, was forced to freeze customer deposits due to extreme market conditions, the SEC Chairman has consistently pointed to the risks and the need for regulation in the crypto space.
“How can anyone offer (such a high percentage of returns) in the market today without giving much disclosure?” the SEC Chairman noted.
Between the SEC and CFTC regulations, the former are considered more stringent.
Source: Crypto News Deutsch