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The independent agency of the US federal government Securities and Exchange Commission (SEC), is after the crypto industry. Recently, the chair of the US SEC, Gary Gensler, opposed the idea of considering crypto exchanges as safe qualified custodians for retail investors.
To reduce the upcoming risks of Ponzi schemes, the commission’s Investor Advisory Committee suggested expanding the 2009 rule on all assets, including crypto assets that are “not funds or securities.” A Ponzi scheme is a method where victims believe they are making profits from a business activity but are unaware that the remaining investors are the source of those funds.
“Based upon how crypto trading and lending platforms generally operate, investment advisers cannot rely on them as qualified custodians, just because a crypto trading platform claims to be a qualified custodian doesn’t mean that it is,” Gensler stated. Meanwhile, Kraken says that the United States’ largest cryptocurrency exchange platform Coinbase (COIN) and one of the most established crypto exchanges in the world are continuing its operations.
The regulatory leaders of these exchanges said that Coinbase and Kraken believe that the listed tokens are not considered as securities on their respective platforms. In a recent panel discussion held in Washington, Scott Bauguess, vice president of global regulatory policy at Coinbase, said, “We are comfortable that the products we are offering in the US are not securities.”
Jonanthan Jachym, global head of policy at Kraken, said it is time to renew the current laws to fit today’s crypto. “Disclosures, market integrity, conflict of interest rules..it’s not reinventing the wheel, these policies have existed for a long time, but there are nuances,” he added.
Earlier on Feb 9, the SEC charged Kraken with breaching the nation’s security laws. In response, the agency reported that the crypto exchange agreed to shut off its shaking service and pay $30 million in penalties to settle the case. Jachym said it was a business decision to settle the matter, but still, they are ready to fight.
The US regulator is often accused of unfairly trying to impose securities regulations and trying to label digital assets as securities. On July 21, 2022, the SEC announced insider trading charges against a former Coinbase product manager. Meanwhile, the cryptocurrency trade group Chamber of Digital Commerce argued that the case erroneously labeled several crypto assets as securities. Hence, the association requested the federal court dismiss a lawsuit the SEC filed against former Coinbase employees.
The founder and CEO of the Chamber of Digital Commerce, Perianne Boring, said, “This case represents a stealthy, yet dramatic and unprecedented effort to expand that SEC’s jurisdictional reach and threatens the health of the US marketplace for digital assets.”
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
