Are SEC Cryptocurrency Regulations Coming?

The United States has had few cryptocurrency regulations since these digital assets first came into public use. Now, as it continues to grow, that direction could be changing.

With a new U.S. president comes new leaders for government establishments. The Securities and Exchange Commission (SEC) will likely have a new chair, Gary Gensler, later this month. Gensler’s approach to the crypto world suggests new regulations are on their way.

A New SEC Nomination

The U.S. perspective on cryptocurrency changes depending on the administration. Under the Trump administration, the former SEC chair, Jay Clayton, held a strict approach towards cryptocurrency security. Clayton’s SEC focused on fraudulent offerings along with the blockchain, even suing Ripple Labs, a tech payment and exchange company.

President Biden nominated Gary Gensler at the end of January. His Senate hearing commenced on April 12, and he will likely be confirmed as the next chair of the SEC. Now that cryptocurrencies have become so widespread in the U.S., Gensler will have many considerations moving forward.

Primarily, lawmakers want to establish more clarity around the classification of cryptocurrencies. Lawmakers recently introduced a bill that would help clarify cryptocurrency regulations in the States. The bill would form a group under the Eliminate Barriers to Innovation Act of 2021 to consider what the SEC has jurisdiction over, which would be when crypto is officially considered a security.

The group would also establish jurisdiction of the Commodity Futures Trading Commission (CFTC), which would signify crypto being a commodity.

Gensler is pro-regulation and pro-cryptocurrency. He also worked as the chair of the CFTC under the Obama administration after 2008 and helped handle the financial crisis. His perspective and expertise with the CFTC should help him balance the new movement in establishing SEC and CFTC jurisdiction regarding crypto assets.

Working with the proposed group, Gensler would also help analyze the impact crypto assets have on U.S. markets and provide more security and privacy ideas for countering fraud and protecting investors. With these incoming approaches, we may be seeing some new regulations soon.

Upcoming Crypto Changes

The crypto world changes quickly. A few years ago, using Bitcoin as a form of payment wasn’t widely possible. Now, major companies like Tesla and PayPal accept and facilitate crypto assets as payment. On top of this popular adoption, Bitcoin reached a record high of almost $62,000 in March, as more investors keep hopping on board and more mining companies keep opening up.

This drastic growth has been happening without clear government regulations. With the new SEC chair, though, regulations could help stabilize what has historically been a volatile market. The price of Bitcoin and other crypto stocks have drastic highs and lows, which could make it a risky investment — more so than traditional stocks and purchases.

In addition to the volatility, the crypto world’s newness comes with security risks. Last year, companies and investors faced numerous breaches where investors collectively lost millions.

A more deliberate governmental approach to this digital realm can help protect investors from fraud and breaches while making these assets a worthwhile endeavor.

Should the proposed Eliminate Barriers to Innovation Act of 2021 go through, the government can help mitigate risks and facilitate more economic activity. As an investor, cryptocurrencies offer an innovative, creative way to interact with stocks and vendors. It only makes sense that the government now plans to regulate these connections.

Widespread Crypto Impact

Right now, the U.S. still has a way to go with cryptocurrency regulations. Having a new SEC chair who favors crypto usage and regulations is a good step for the country and consumers. Security, privacy, and handling changes appear to be on their way during the Biden era.

With these steps forward, the U.S. can create a more practical path forward that solidifies the country as a cryptocurrency leader.

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