SEC’s Gensler Going Rogue in Solo Quest to Stop U.S. Crypto Legislation?

As an analyst with a background in financial regulation, I believe that Gary Gensler’s stance on crypto regulation is both principled and pragmatic. The SEC Chair has consistently argued that existing securities laws provide sufficient authority for the agency to police the crypto market. This view contrasts with the White House and other regulatory bodies that are pushing for new legislation.

As a researcher, I’ve come across recent developments where the White House has expressed its readiness to engage in crafting a cryptocurrency bill. This was conveyed through a statement released on Wednesday, reaffirming their intent to establish new policies for digital assets, with a focus on safeguarding investors.

According to Gary Gensler, the chair of the Securities and Exchange Commission (SEC) appointed by President Joe Biden, current regulations grant the SEC sufficient power to oversee digital assets. However, this perspective contradicts other U.S. regulatory bodies, the White House, and the Treasury Department, who may hold different views on the matter.

Gensler criticized cryptocurrency companies in a statement released against the Financial Innovation and Technology for the 21st Century Act (FIT21) on Wednesday. With a large number of Democratic backers anticipated to support the bill’s upcoming vote, he reproached these firms for their persistent refusal to adhere to existing laws and regulations over the past decade. They have argued that these rules do not pertain to them or proposed creating new legislation that would apply retroactively to absolve their previous misconduct.

As an analyst, I would rephrase it as follows: “I believe the high incidence of failures, frauds, and bankruptcies within the crypto industry is not a result of lacking regulations or ambiguous rules. Instead, it’s due to many participants in the industry disregarding the existing regulatory framework.”

As a crypto investor, I understand that the White House under President Biden might not be in favor of FIT21 (Federal Investment Technology Act), but this morning’s policy statement indicates their willingness to collaborate with Congress to establish a thorough and balanced regulatory framework for digital assets. We can lean on existing authorities as a foundation for this endeavor.

Rep. French Hill (R-Ark.) expressed in a CoinDesk TV interview on Wednesday that several House Democrats acknowledge the shortcomings of the current Securities and Exchange Commission (SEC) regulations. Hill further explained that FIT21 aims to provide the SEC, led by Chair Gary Gensler, with a clear guide for managing the digital asset sector based on this recognition.

Hill expressed his confusion over why the person had adopted that particular stance, adding that he seemed detached from other regulatory heads.

As a crypto investor, I’ve noticed that the SEC hasn’t yet responded to my query on Wednesday regarding Gensler’s potential conflicting views with other government officials.

Consumer advocacy organizations support Gensler’s stance, while Mark Hays, a senior policy analyst at Americans for Financial Reform and Demand Progress, downplayed the perceived discrepancies within various federal agencies.

In an email exchange with CoinDesk, he expressed that each regulator holds unique perspectives on the significance and creative aspects of politics in the realm of cryptocurrency. The regulatory bodies possess various means to tackle crypto-related legislative issues. Some have demonstrated proficiency in this area, while others could benefit from increased engagement.

Hays suggested that the difference between the SEC and CFTC in regulating spot markets could be bridged through distinct legislation designating the SEC as their overseer. He advocated for giving more weight to the SEC’s perspective on investor protection, acknowledging the CFTC’s role but describing it as disruptive. Several organizations, including Hays’ group, are among numerous entities voicing opposition to FIT21 based on consumer-protection concerns.

As a researcher studying the regulatory landscape of cryptocurrencies, I’ve noticed that several voices within the government have advocated for legislation in this area. Among them is Janet Yellen, the Treasury Secretary, who earlier this year called for Congress to pass laws for the regulation of stablecoins and the spot market for crypto-assets that don’t qualify as securities. The specific intentions of the Treasury regarding crypto oversight aren’t entirely clear from their recent statements, but it appears that they are particularly interested in addressing issues related to spot markets and illicit finance. It’s important to note that the Financial Institutions Technology Act 21 (FIT21) does not seem to be part of the administration’s plans for crypto regulation.

Despite the government’s opposition, this is the initial cryptocurrency bill up for a vote in Congress, making it the most significant digital asset legislation under discussion.

Hill expressed his disappointment that Chairman Gensler fails to recognize the advantages of this new approach over the existing legislation. It provides him with the necessary means and procedures to excel as an effective regulator and supervisor in this domain.