SEC calls on Congress to implement regulations for digital currency exchangesJune 2, 2021
The U.S. Securities and Exchange Commission (SEC) wants to regulate the digital currency exchange sector, and it’s calling on Congress for assistance. In a recent hearing, SEC chair Gary Gensler pointed out that exchanges are growing increasingly important, but there are very few rules that govern them.
Gary Gensler, who was sworn in as the SEC chair recently and since then, has been calling for regulation towards digital currencies. In a recent hearing before the Financial Services and General Government subcommittee at the House of Representatives, he reiterated this point.
“I think that there are gaps in our current system,” he told the subcommittee. The SEC has continued to make diligent effort to regulate the budding digital currencies industry. However, “there are thousands of tokens and we’ve only been able to bring 75 actions against digital currency offenders. There are many others that are non-compliant.”
However, it’s with the exchanges that he sees the biggest need for enhanced regulations.
“I think the bigger gap is around exchanges, and I would think we could work with Congress to try and bring investor protection to the platforms where these ‘sometimes commodities, sometimes currencies’ are trading from.”
Gensler believes that establishing “rules of the road” is important to protect investors. He pointed to the traditional markets such as the New York Stock Exchange and Nasdaq as two efficiently-run markets in which investors are protected against illegal practices.
Gensler, a former CFTC chair, said he has been working with his former agency to establish ‘who does what’ in the ecosystem.
One of the problems that the SEC has faced is underfunding, Gensler said. The agency spends just 16% of its $325 million budget a year on technology, “which is less than probably what some large firms spend in a month, or some even in two weeks.” This puts the agency at a disadvantage and it’s unable to keep up with some market participants.
Gensler has previously heaped praise on digital assets, describing them as new thinking to payments. However, he has always cautioned that the regulators need to evolve to keep up with the industry. Currently, his ‘digital currency plate’ is full with issues ranging from rug pulls in the industry to the months-long SEC vs. Ripple lawsuit.
See also: SEC Commissioner Hester Peirce discusses “Blockchain Policy Matters” with Bitcoin Association’s Jimmy Nguyen
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