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Cryptocurrencies continue to face tumultuous times. The U.S. Department of Justice has filed charges against 18 individuals and companies for manipulation. Bitfinex is set to receive billions in refunds, and the Federal Reserve’s minutes indicate cautious easing warnings. We can briefly examine the dizzying agenda of the last few hours, especially focusing on the questions directed at SEC Chair Gensler today.
SEC Chair and Cryptocurrency Inquiry
On October 9, the SEC Chair met with law students. During a discussion at New York University’s Institute for Corporate Governance and Finance, questions were posed to Gensler about regulations that have remained in effect for over 80 years, which aim to include cryptocurrency.
The SEC refers to the Howey test from a 1946 U.S. Supreme Court case to determine whether an asset is an investment contract or a security. A key question posed to Gensler was;
“Should we regulate cryptocurrency by trying to apply a Supreme Court ruling from the 1940s?”
Gensler responded;
“This is our country’s law and I swore to uphold it, but it also protects investors. The essence of securities laws is a fundamental concept – you all decide what you want to invest in.”
Cryptocurrency Stars in Prison
Gensler and his team have been urging cryptocurrency companies to register with the agency for years. However, due to a lack of guidance, companies are unsure how to proceed. The SEC requests that they hire lawyers, but attorneys are also unclear about the process. Without a clear regulatory framework for cryptocurrency companies, the only way to comply appears to be to avoid engaging in cryptocurrency business.
In response to all this criticism, the SEC Chair remarked;
“I genuinely say, in 2022, the leading figures in this field are either in prison or awaiting extradition. Just because people dislike the law doesn’t mean there isn’t a law. These things are unlikely to serve as a currency. They need to demonstrate their value (utility) through production and use.”
