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Bitcoin The Almighty Buck Government United States

SEC Chair Calls On Congress To Help Rein In Crypto 'Wild West' (reuters.com) 63

Posted by BeauHD from the need-more-power dept.
The chair of the U.S. Securities and Exchange Commission (SEC) on Tuesday called on Congress to give the agency more authority to better police cryptocurrency trading, lending and platforms, a "Wild West" he said is riddled with fraud and investor risk. Reuters reports: Gary Gensler said the crypto market involves many tokens which may be unregistered securities and leaves prices open to manipulation and millions of investors vulnerable to risks. "This asset class is rife with fraud, scams and abuse in certain applications," Gensler told a global conference. "We need additional Congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks."

The industry has been waiting with bated breath to see how Gensler, a Democratic appointee who took the SEC helm in April, will approach oversight of the market, which he has previously said should be brought within traditional financial regulation. On Tuesday, Gensler provided more insight on his thinking, saying he would like Congress to give the SEC the power to oversee cryptocurrency exchanges, which are not currently within the SEC's remit. He also called on lawmakers to give the SEC more power to oversee crypto lending, and platforms like peer-to-peer decentralized finance (DeFi) sites that allow lenders and borrowers to transact in cryptocurrencies without traditional banks. "If we don't address these issues, I worry a lot of people will be hurt."
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SEC Chair Calls On Congress To Help Rein In Crypto 'Wild West' More

SEC Chair Calls On Congress To Help Rein In Crypto 'Wild West'

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  • "How dare you reign in our Wild West! We made it like that on purpose!"

    Also:

    "How dare Elon Musk pump & dump Bitcoin!"

  • Wouldn't it be nice if the SEC had any teeth to enforce the rules that are already in it's jurdistiction? But like everything else, it has been bought and paid for. And just iMHO if you deal in unregulated securities then you're just asking for trouble.

  • Bureaucrats gotta bureaucrat (Score:3, Insightful)

    by RogueWarrior65 ( 678876 ) on Tuesday August 03, 2021 @04:49PM (#61652433)

    Can't have the plebs not be beholden to their betters, now can we? After all, they might start thinking and realizing they don't need bureaucracy.

    • Re: (Score:2)

      by vadim_t ( 324782 )

      That's a good joke.

      Practical reality shows that you almost always end up being beholden to somebody. Bitcoin tried to do otherwise, and it still didn't work.

      Instead of a government there's a tiny cabal of developers, aided by by various third parties. Eg, back when the whole segwit/2X debacle happened, if you didn't take the position the people in control wanted, you risked getting DoSed.

      Really, if you think of it it's hard for it to be otherwise. As a piece of networking software, a cryptocurrency needs so

      • And so you put together a balanced portfolio of different cryptocurrencies. Having a single point of failure is not a good idea.

        • If you're trying to use cryptocurrencies as...you know...currency, then the fact that you need to keep a "balanced portfolio" of them to guard against devaluation is already a big red flag. If I accept some crypto-coin in exchange for goods and services I want to have some confidence that the coin will retain enough value that I'll be able to pay my bills at the end of the month.

          Although I suppose in fairness these days most people are using cryptocurrencies more as a speculative asset or inflation hedge,

      • Yup, millions of people deploying 100's of Billions of dollars deployed into BTC have missed this point that their money is controlled by this invisible unknown group of some coders and fraudsters ?

        And those billions of people who have taken covid vaccines incl top politicians and mega business owners have missed the point that 5G + Bill Gates have put mind control nano machines in the vaccines ??

  • Didn't see that one coming

  • I don't exactly know what this will do to crypto prices so I have no idea if this means to get in or get out.

    But I do know some exchanges will be shut down, and especially stuff like Tether (which people use to buy other crypto with crazy leverage) may vaporize.

    Also of course the U.S. is close to introducing a digital currency and we all know how governments love competition for official currency!

    Good luck out there. Personally at the moment I am way more into Silver/Gold than crypto, though if we had a dr

    • Except this has nothing to do with government worry about currency, since "cryptocurrency" isn't money. An asset taxable upon sale is all, and this regulation is overdue. Nothing of value will be lost.

    • If you're gambling with leverage at large scale it really doesn't matter much wether you borrow tether or dollars.

  • SEC should stop other abuse first. (Score:4, Insightful)

    by megalon ( 19030 ) on Tuesday August 03, 2021 @04:57PM (#61652477)

    Maybe to start, the SEC should publish a list all elected officials, with particulars, who have used insider information on the regular stock market? Congress has made themselves exempt from insider trading laws, but there is no reason each occurrence can't be published regularly.

  • When I saw the headline, I assumed they were talking about backdooring our ciphers again. Then I thought, "Why does the SEC care?"

    • Re: (Score:2)

      by gweihir ( 88907 )

      That is because the cryptocurrency morons are not smart enough to deal with a complex word like "cryptocurrency" and in addition do not know that "crypto" already is taken as an acronym.

  • Greater fool theory turning into musical chairs. (Score:3, Interesting)

    by Fly Swatter ( 30498 ) on Tuesday August 03, 2021 @05:01PM (#61652489) Homepage
    Once the music starts playing, if you are still in crypto you are the fool.

    Then again, the whole thing has been a fool's quest.

    • Re: (Score:2, Troll)

      by bwt ( 68845 )

      Lol, there are a billion each making music independently. It's never going to stop. The fossils in Congress can see that, but not you.

    • This is not tulip bubble. BTC cannot go under USD 100. Bubble's burst; but crypto has crashed but recovered a lot many times. Those who don't understand the math behind crypto, call it with things like ponzi. Also they are not freedom loving as crypto is decentralized and saves us from the big corporate/bank guys who are bad.

    • Re: (Score:2)

      by Xenna ( 37238 )

      Let me tell you about musical chairs. It's about when the music *stops* playing...

      You probably got the rest of your post wrong too ;-)

      • But the game officially starts when the music starts. It simply hasn't started yet.

        If I'm wrong it will still be entertaining from an outside perspective.
  • Comment removed based on user account deletion

    • When you sell beanie babies at a profit that is a taxable event, even if you choose to leave that income off of your taxes and pretend that your profit is not taxable.

      • If you sell beanie babies at a profit, you should not choose to leave that income off of your taxes because you pretend that your profit is not taxable, but because you should be ashamed of yourself for owning beanie babies.

    • "You know the 1% is involved when new legislation is being called for which nobody asked for."

      Now that is an interesting idea, but I don't understand why would the 1% care either way? Especially you would think they wouldn't want the government getting involved.

  • Are we sure the SEC are the right people to be doing this? Isnt crypto currency a currency ? The SEC does not regulate Gold, Silver, Platinum, Rodium, etc. (except for gold stocks and options) I mean if you are going to assign a government agency to oversee a currency, should it not be The Office of the Comptroller of the Currency (OCC)? I just want to make sure we give the job to the most capable agency with the right expertise and not because an agency is looking for a new power grab (see how the feds fou

    • Re: (Score:3)

      by chill ( 34294 )

      Yes. You can call it "currency" all day long, but it isn't recognized as such by the gov't.

      Qâ"1: How is virtual currency treated for federal tax purposes?

      Aâ"1: For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.

      Qâ"2: Is virtual currency treated as currency for purposes of determining whether a transaction results in foreign currency gain or loss under U.S. federal tax laws?

      Aâ"2: No. Under currently applicable law, virtual currency is not treated as currency that could generate foreign currency gain or loss for U.S. federal tax purposes.

      https://www.irs.gov/irb/2014-16_IRB#NOT-2014-21 [irs.gov]

      • You arent wrong, but thats the point of the article. The SEC also is powerless. So obviously they ask asking the government to change their view of what it is. My question is, Is the SEC the best candidate or do we give it to regulators that have experience with other currencies and change its definition. If its property, what separates it from purchases of bullion? Sometimes agencies want new powers because it means new departments, which translates to more employees and more management. Its an easy button

        • Re: (Score:2)

          by chill ( 34294 )

          The SEC also is powerless. So obviously they ask asking the government to change their view of what it is.

          That's not quite correct. The are not asking the gov't to change the view of what it is. Cryptocurrency is already recognized as something under the SEC's umbrella. They're looking for clear authority for edge cases and the parts might overlap with the FTC and maybe other branches of Treasury.

          "Certain rules related to crypto assets are well settled. The test to determine whether a crypto asset is a security is clear," he said. "There are some gaps in this space, though: We need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector."

          That was from the NBC News article [cnbc.com] covering Mr. Gensler's testimony.

          Also,

          He said many of the crypto coins were trading like assets and should fall under the purview of the SEC, which already has significant authority over digital assets.

          To be clear, I'm just saying this isn't an out-of-the-blue grab for jurisdiction as most of it already lies with the SEC. This would probably ch

    • Isnt crypto currency a currency ?

      What they're asking for is powers to regulate trading and lending, afaik the OCC doesn't really handle that and only works with banks (supervising things like money laundering and inter institutional risk management which is also interesting wrt crypto).

    • Re: (Score:2)

      by mysidia ( 191772 )

      I mean if you are going to assign a government agency to oversee a currency, should it not be The Office of the Comptroller of the Currency (OCC)?

      It's not a currency. I would say it should be the CFTC who looks at it - the trade in Futures and such commodities as Gold, Silver, etc, are regulated by the CFTC. The SEC's purview is Securities - which are marketable ownership interests in a business or enterprise, the Equity and Debt notes from those companies offered for sale to the public, and sim

  • And the Nanny State ... (Score:3)

    by Big Bipper ( 1120937 ) on Tuesday August 03, 2021 @05:42PM (#61652639)
    And the Nanny State swings into high gear

  • Hustle (Score:3)

    by backslashdot ( 95548 ) on Tuesday August 03, 2021 @05:59PM (#61652719)

    Anytime you plant a seed, there are bound to be people jealous of your success that will try to come squish your tree before you can have its fruits.
    -exact lyrics from the song Sheriff John Brown by Bob Marley

    Nobody is forced to invest in crypto. Literally everyone putting money in it is gambling like they are in a casino and they know it

    • The problem with crypto is not a bunch of folks doing gambling -- like any bubble lot of people lose money (as it is a ponzi). The problem with crypto is that it is reating real world problems to society -- environmental damage and chip shortages (thru' electricity and GPU usage). We as society don't care a bunch of fools gamble n go broke; but we care about the lost opportunity cost of those resources which are being hogged by mining.

  • It was a crypto scam straight out of a Steven Seagal movie, featuring the action film star himself, a private eye, a staged kidnapping and millions of dollars that vanished into thin air [marketwatch.com].

    Prosecutors say the fraud left nearly 500 investors out more than $11 million in cash and a mix of established cryptocurrencies that they had plunked into a purported crypto-mining operation — with the promise of up to 200% gains within 60-to-90 days.

    But instead of reaping huge returns, the money was funneled into acc

  • The rhetoric is good, and there are some abuses that could be reigned in, but I'd worry a lot more about stiffling innovation that the risks from shit coins.

    Things I'd consider good:
    - laws against "rug pulling"
    - stable coin auditing requirements. The Tether USDT problem
    - a reporting standard for exchanges to report their transactions to users, so that it doesn't take proprietary specialists to compute income and capital gains tax
    - laws the penalize fraud in the defi space

    Thin

    • Seems anonymous-transaction and coersion/extortion are two sides of the same coin. There seems no way to track/prevent/punish theft or provide retribution. So it's great for the side that is doing the coersion.
  • So, the we're all fine with this poisoned garden that the SEC has created, where transactions are inefficient (currently T2), and require a central, anointed entity, DTCC, to provide clearing to ensure order fulfillment? And then on top of this, they support trading houses like Citadel, who both make markets for retail brokers as well as purchase order flow data from these brokers. And then they have their own trades on top of this?

    It's all a nasty cesspool of conflict of interest. The greed and corru
    • Last I checked, stock brokerages, clearing houses, and exchanges are not shutting down in the middle of the night and taking everyone's stocks with them.

  • This needed to happen years ago.

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