SEC Chairman Worries Crypto Bill Will Undermine Financial Protections

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler expressed his concern that a proposal to create a regulatory framework for cryptocurrencies could weaken investor protections in traditional financial markets.

At the Wall Street Journal CFO Network Summit on June 14, Gensler was asked about his thoughts on a bill introduced on June 7 by Republican Sen. Cynthia Lummis and Democratic Sen. Kirsten Gillibrand.

"We don't want to undermine the protections we enjoy in a $100 trillion capital market," adding:

"We don't want our current stock exchanges, mutual funds, or public companies to sort of casually swipe a pen and say, 'You know what, I want to be non-compliant too, I want to get out of this I think in the past A system that has delivered great benefits to investors and economic growth for 90 years.'

The bipartisan Lummis-Gillibrand Responsible Financial Innovation Act aims to address multiple aspects of cryptocurrency regulation, such as the tax treatment of digital assets, stablecoins and institutional jurisdictions.

A provision of the bill gives the Commodity Futures Trading Commission (CFTC) “explicit authority” over spot markets for digital assets, and Gensler has long asserted that most cryptocurrencies are securities, regulated by the SEC.

The senators mostly agreed with Gensler, saying some altcoins (Altcoins) could be considered securities under the proposed law, while Bitcoin (BTC) and Ethereum (ETH) are considered commodities.

At the summit, Gensler said the SEC has no plans to expand its jurisdiction and that some cryptocurrencies are already under the agency’s jurisdiction because they qualify as securities.

"We're just looking at the public...these tokens are being offered to the public, and the public wants a better future. That's the nature of the investment contract."

Meanwhile, speaking at a June 14 event, CFTC Commissioner Christy Goldsmith Romero welcomed the regulatory action by Congress. Romero said she has not read the Lummis-Gillibrand bill.

Romero, who worked as a senior counsel in the SEC's enforcement division, was asked whether it was accurate to say that the CFTC is a more laissez-faire regulator than the SEC.

"No, not at all...they're actually very similar," she said, adding that the CFTC has taken multiple enforcement actions in the crypto space and that each agency is concerned with "vigorous regulation of the market."

Explaining the discrepancies she has witnessed, Romero said that the CFTC has allowed more cryptocurrency products to be traded on its regulated exchanges, with 18 products currently traded in 11 regulated entities:

“It means that the CFTC is very experienced in how to regulate transactions in this market, which has been very helpful to our growth. It still requires cooperation and coordination with the SEC, which I am 100% committed to, and the SEC was my former home. "