In what can be perceived to be a big boost for the crypto community, Gary Gensler, the newly appointed chairman of the Securities and Exchange Commission (SEC) has asked the Congress to look into crypto regulation.
There have been no clear regulatory overlook on the crypto exchanges and whatever has been there has only been either a token regulation or something very strict which has led to many exchanges being shut down or the investors losing money to scams.
The term of Mr.Gensler is being watched very keenly by the crypto community as among the recent chairs of the SEC, he is expected to be the one with the most knowledge around the crypto industry and hence is expected to do what is needed for the community to gain recognition but at the same time, keeping the investors safe.
Mr. Gensler was testifying at the hearing of the House Financial Services Committee on market volatility surrounding GameStop and other meme-ified securities on May 6. To a specific question, he replied:
“This market, which is close to $2 trillion, [the] crypto-asset market, is one that could benefit from greater investor protection,” Gensler commented, remarking,
“I do think that working with Congress, and I think it’s only Congress that can really address it, it would be good to consider…whether to bring greater investor protection to the crypto exchanges. And I think if that were to be the case, because right now, the exchanges trading in these crypto-assets do not have a regulatory framework either at the SEC or at our site agency, the [CFTC], that could instil greater confidence.
“Right now, there’s not a market regulator around these crypto exchanges and thus there’s really not protection against fraud or manipulation,” Gensler went on to say.
Though this hearing was in regard to Gamestop and how the share price was manipulated due to certain groups of investors and traders colluding with each other, his comments regarding the crypto exchanges and the need to regulate it would resonate well with the industry. Though regulations could lead to some very tight controls and would could throttle some free flow of funds, it is important for regulations to come into the crypto industry for it to instil confidence among large investors and corporates that crypto can be an alternative to stocks and FX.
In recent months, regulators, especially in the US have been looking into crypto operations pretty seriously both as a form of weeding out the scammers and also to reform and regulate the industry in due course of time. Some states have their own crypto regulations and sooner or later, more states are expected to follow.
Also, recently, there has been a battle going on between the digital asset Ripple and the SEC on the legality of Ripple and the regulations surrounding it and this has also been watched very closely by the crypto industry. These comments from the chair could lead the Ripple investors to believe that the SEC could take a lenient view of Ripple after all.