Head of America's SEC: Crypto Firms Should Comply With US Regulations (thehill.com) 47
"Crypto firms should do their work within the bounds of the law, or they shouldn't do it at all," says the head of America's Securities and Exchange Commission, which regulates US. investment markets.
In an editorial published in The Hill, SEC chair Gary Gensler warns that instead cryptocurrency has many "trusted" intermediaries that are in fact non-compliant with U.S. securities law. Today, crypto is dominated by a handful of trading, lending, staking, and other financial intermediaries. The investing public is trusting these entities to be responsible with investors' assets. According to some data, the three largest crypto trading platforms purportedly account for almost three quarters of all trading volume. Crypto entrepreneurs might claim, in their own marketing materials, that they're transparent and regulated. But make no mistake: Very few, if any, are actually registered with the SEC and fully compliant with the federal securities laws.
The lack of compliance puts investors' hard-earned assets at risk. Investors lack fundamental disclosures about the crypto assets themselves and the firms who execute their trades and custody their assets: What are firms doing with customer assets? How are they funding their promised returns? Are they putting their hands in investors' pockets? When you buy or sell a token, are you trading against the house? What are the rules to protect against manipulation and fraud? Without disclosure and other investor protections, we simply don't know.
In essence, these firms are saying, "trust us." What's more, when firms go bankrupt (as many have of late), they turn to bankruptcy courts to sort out their mess.
"[B]ased upon how crypto platforms generally operate, investment advisers cannot rely on them today as qualified custodians," the editorial concludes. Rather than comply with the relevant laws, "it has felt like some have sought a stamp of approval for noncompliant activity, rather than changing a fundamentally non-compliant business model rife with conflicts." Of course, another tool in our toolbox is rooting out noncompliance through investigations and enforcement actions. The SEC has successfully brought or settled more than 100 cases against crypto intermediaries and token issuers, including some who operated Ponzi or pyramid schemes, engaged in unlawful touting, or committed other forms of fraud....
Some have said that we should let the innovation flourish or risk it going overseas. But forsaking investor protection puts real people's life savings at risk.
"It's a basic bargain in finance: If you want to raise money from the public, disclose certain facts and figures," Gensler told Politico this week. Their article notes "crypto giants are threatening to move their businesses across the Atlantic" from America to Europe, but with Gensler responding "We lose more if investors get harmed here." Crypto lobbyists have framed Gensler's push to force their industry to comply with 90-year-old securities laws as a war against financial innovation. Whatever changes brought by crypto markets will pale compared to what could come as brokerages and financial data aggregators move to incorporate artificial intelligence into their offerings, Gensler said.
"The much more transformative technology right now of our times is predictive data analytics and everything underlying artificial intelligence," he said, adding that he looked forward to working with lawmakers on how those tools could be regulated.
In an editorial published in The Hill, SEC chair Gary Gensler warns that instead cryptocurrency has many "trusted" intermediaries that are in fact non-compliant with U.S. securities law. Today, crypto is dominated by a handful of trading, lending, staking, and other financial intermediaries. The investing public is trusting these entities to be responsible with investors' assets. According to some data, the three largest crypto trading platforms purportedly account for almost three quarters of all trading volume. Crypto entrepreneurs might claim, in their own marketing materials, that they're transparent and regulated. But make no mistake: Very few, if any, are actually registered with the SEC and fully compliant with the federal securities laws.
The lack of compliance puts investors' hard-earned assets at risk. Investors lack fundamental disclosures about the crypto assets themselves and the firms who execute their trades and custody their assets: What are firms doing with customer assets? How are they funding their promised returns? Are they putting their hands in investors' pockets? When you buy or sell a token, are you trading against the house? What are the rules to protect against manipulation and fraud? Without disclosure and other investor protections, we simply don't know.
In essence, these firms are saying, "trust us." What's more, when firms go bankrupt (as many have of late), they turn to bankruptcy courts to sort out their mess.
"[B]ased upon how crypto platforms generally operate, investment advisers cannot rely on them today as qualified custodians," the editorial concludes. Rather than comply with the relevant laws, "it has felt like some have sought a stamp of approval for noncompliant activity, rather than changing a fundamentally non-compliant business model rife with conflicts." Of course, another tool in our toolbox is rooting out noncompliance through investigations and enforcement actions. The SEC has successfully brought or settled more than 100 cases against crypto intermediaries and token issuers, including some who operated Ponzi or pyramid schemes, engaged in unlawful touting, or committed other forms of fraud....
Some have said that we should let the innovation flourish or risk it going overseas. But forsaking investor protection puts real people's life savings at risk.
"It's a basic bargain in finance: If you want to raise money from the public, disclose certain facts and figures," Gensler told Politico this week. Their article notes "crypto giants are threatening to move their businesses across the Atlantic" from America to Europe, but with Gensler responding "We lose more if investors get harmed here." Crypto lobbyists have framed Gensler's push to force their industry to comply with 90-year-old securities laws as a war against financial innovation. Whatever changes brought by crypto markets will pale compared to what could come as brokerages and financial data aggregators move to incorporate artificial intelligence into their offerings, Gensler said.
"The much more transformative technology right now of our times is predictive data analytics and everything underlying artificial intelligence," he said, adding that he looked forward to working with lawmakers on how those tools could be regulated.
\o/ (Score:1, Flamebait)
Because one group should decide for everyone.
I feel as though the world has passed the point where this is considered acceptable.
Good luck!
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Yes that's how civilization works, one entity has a monopoly use of violence.
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As opposed to who, every gun-nut gang, sorry, "self-proclained militia", NOT well-regulated?
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I can only assume you are talking about the SEC? They don't decide for everyone. There are some guiderails and barriers like "Don't make a business out of hit-bouties." or "Don't run an unregulated gambling house." Inside that, the market is extremely free.... a little too free. You can blatently lie to your customers in many cases and its just consider "bending the truth" or "its ok cause your terms & conditions" state the actual facts.
What's ridiculous is that the SEC had to even put out this stat
Re: \o/ (Score:1)
I stand corrected :-)
Funny thing (Score:5, Informative)
The president of SVB, Greg Becker, personally lobbied Congress [theguardian.com] to change the regulations. After Dodd-Frank was implemented, the regulation said if a bank had $50 billion in assets it needed to submit to enhanced scrutiny. This included stress testing and doing regulatory paperwork.
Becker said his bank, SVB, was nearing the $50 billion trigger and when it did that would mean the bank would spend an inordinate amount of time doing the paperwork, responding to regulatory requests and so on, such that they wouldn't be able to help create all those thousands of jobs entrepreneurs in Silicon Valley would need. In short, those regulations would be too burdensome and onerous on such a small bank as his and it would be better if the regulatory trigger amount was set to, let's say, $250 billion. Congress agreed. In 2018 the con artist signed legislation loosening regulations on banks.
Fast forward five years and here we are lauging our asses off at the collapse of this bank as people such as Larry Summers, who is vehemently opposed to student loan forgiveness, are now saying every depositor with SVB should be made completely whole [yahoo.com]. Not up to the FDIC limit, but every penny they had given back. In other words, he, and many others, want the U.S. taxpayer to hand over their money so these people don't have to suffer the consequences of capitalism.
Unfortunately, Janet Yellen is hedging her bets. She says there will be no bailout [theguardian.com] of the bank itself, but that she is looking into how to help despositors, including those with uninsured deposits.
When Wall Street comes knockin, hold onto your wallets.
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Regulatory capture, just say no!
This is why you don't let Wall Street gamble (Score:3)
You don't get rich spending your own cash. What's that old saying? "Behind every great fortune is a great crime"...
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What's that old saying? "Behind every great fortune is a great crime"...
"Show me the man and I'll tell you the crime." - Beria
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But all the KYC you have to go through to use the crypto exchanges!! Selfies where you have to move your head, bank statements, utility bills, government photo id etc etc. Thats because they are regulated, isn't it? They couldn't do business without having to know their customers because thats what the US federal regulations require of them!? Surely?
Butbutbutbutbut... (Score:2)
No! Crypto is supposed to be sticking it to da man, we can't allow da man to regulate it! And how should I fleece my dupes, I mean, take care of my investors if there's always some fed looking over my shoulder?
Re:Butbutbutbutbut... (Score:4, Insightful)
Those feds should leave us the fuck alone and stop getting in the way of our job creation! Unless of course we manage to go bust, and then they need to bail us out. And no, we don't need any new laws to prevent the next bust.
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"In essence, these firms are saying, "trust us.""
This is shortly followed by a famous quote from Animal House; "Face it, you fucked up, you trusted us."
Really? Is this guy paid for stating the obvious? (Score:2)
What next? Murderers shouldn't kill people? Automobile drivers should stop at the red light? POTUSes should respect the constitution?
You gotta understand (Score:1)
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"A technology company"? No. Find a more interesting way to be wrong next time.
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Laws that hurt profits don't apply either.
I disagree. (Score:2)
I wouldn't demand that a snake oil salesman get a medical license. At worst I'd demand that they no longer make specific claims about their snake oil. Let them implode.
Crypto: Currency Based on Electricity Waste (Score:2)
Hyperbole (Score:2)
Since this site tends to try to be pedantic, note that that was hyperbole. That said, the losses retail has taken via dark pools us easily the size of the whole crypto market if not larger. I don't think many folks sympathetic to the SEC on this issue realize how bad the situation really is for retail investors in the stock market who don't stay in the hedgefund-approved lanes.
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Responsible, serious investors are doing juuussstttt ffiiinnneeeee. Mutual fund owners, buy-and-holders, balanced-portfolio types the smart money is in decent shape. It’s the compulsive gamblers on Robinhood and all the crypto exchanges that are getting fleeced. These are not “investors”. They’re called “people with money to burn”.
And whats this about Hedgefund
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The SEC is useless and might as well just be disbanded. In their current form they do more harm than good, by making investors feel protected when really they absolutely are not.
That's it for crypto (Score:3)
I suspect they'll move slowly to let the air out of the balloon instead of popping it all at once. Our economy is way, way too top heavy so it's super fragile (one mid sized bank going under has talks of another Black Friday).
Re: That's it for crypto (Score:5, Insightful)
You could make that comparison , you just have to ignore the $2T in reserve notes, the entire $23T US GDP, every other nation using USD as exchange currency, the centuries long legal framework and judicial precedents, the historical stability and the entire US military hegemon and the phrase and meaning and history of "full faith and credit” of the U.S. government" Just take away those minor points and they are totally the same.
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The US no longer has any credit
That doesn't happen to the worlds largest economy unless Congress let's it happen (which a certain group seems hell bent on doing because defaulting the US will epically own them libs right?)
China was the purchaser of a significant amount of this debt and their economy collapsed
Did I miss the news that the worlds second largest economy "collapsed"? Can we just dispense with the silly hyperbole? How are we supposed to engage with anything here? Just make a specific example instead of making me argue about the definition of collapsed in an economic sense because China is still here, is still gr
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You also forget that the US went from 20T in debt just 2 years ago to over 30T in debt today.
Um. 20T was in 2017.
That's six years ago, before the Pandemic.
(damn those pesky facts!)
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It's not crypto that's failing, it's real banks with real money because the USD and EUR and even the Yuan is quickly losing its value, all the debts the governments have traded amongst each other is a card house collapsing started by the housing market in China and investors are running on the bank. People are going to Rupees, Rubles, commodities and crypto.
A ton of banks were just declared insolvent by the SEC, anything pegged to the dollar is going down, people just haven't noticed yet.
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Pay attention. The SEC is involved because they consider most crypto's securities. The SEC (Gensler) has repeatedly said this does not apply to Bitcoin.
As the SEC moves in to regulate everything but Bitcoin.
It's still cheap now, you better hurry...
If you can't depend on stablecoin... (Score:2)
There's always StablerCoin:
https://en.wikipedia.org/wiki/... [wikipedia.org]
Surely you can see the Snake's visage on your currency ?
You had one job (Score:2)
Isn't that your job, dude?
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Maybe exchanges are the problem, not cryptocurrenc (Score:1)
Maybe the problem us that cryptocurrency is being traded in exchanges in the first place. Cryptocurrency is so unlike hard money or fiat paper that you can't treat it like those and not expect trouble. There's also that problem of failing to keep keys safe, which seems to be why cryptocoin heists keep happening.
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Not necessarily lies, merely false. Companies saying that NOW would be lying, but that wasn't obvious at the beginning.
Story headline is the joke (Score:1)
At least the joke I was looking for. No Funny so far in the discussion.
Asking gamblers and greedy cheaters to play nice? That trick never works.
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At least the joke I was looking for. No Funny so far in the discussion.
Asking gamblers and greedy cheaters to play nice? That trick never works.
Quoted against the censor troll with (three) mod points, but my only curiosity is what annoyed the troll. Extremely vague and minor curiosity, but I must be doing something right. Hopefully that "right" thing is also scaring or seriously annoying them in some way.
Bye Bye Binance Business model (Score:2)
This will be the wake up call for all exchanges trying to be anything more than just an exchange because cryptofools trust anyone with their crypto assets.
The time to be playing around with other men's crypto is over.
Just ask Caroline.
Head of America's SEC: Crypto Firms Should Comply (Score:1)