SEC Chair Gensler: Existing Rules Regulate Crypto, Legislation Unnecessary (theblock.co) 23
The Securities and Exchange Commission takes the lead in defining what a security is, not necessarily legislation, the regulator's Chair Gary Gensler said. From a report: After a House Appropriations Committee hearing on Wednesday, Gensler told reporters that existing securities laws "cover most of the activity that's happening in the crypto markets. If Congress were to act, though I don't think we need these authorities, not to undermine inadvertently through definitions of what's in or out, or in essence allowing for conflicts that we don't allow," Gensler said.
"I think there is one agency -- the Securities and Exchange Commission, overseen by two committees -- the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that," Gensler later said. Lawmakers have introduced legislation over the years to regulate crypto. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., have plans to reintroduce legislation next month that would, in part, assert that the Commodity Futures Trading Commission has control over digital asset commodities, such as bitcoin. "I think many of the legislative vehicles would, if adopted, would undermine the securities remit," Gensler added.
"I think there is one agency -- the Securities and Exchange Commission, overseen by two committees -- the House Financial Services and Senate Banking, and the courts that define what a security is and not individual crypto exchanges selecting that," Gensler later said. Lawmakers have introduced legislation over the years to regulate crypto. Sens. Kirsten Gillibrand, D-N.Y., and Cynthia Lummis, R-Wyo., have plans to reintroduce legislation next month that would, in part, assert that the Commodity Futures Trading Commission has control over digital asset commodities, such as bitcoin. "I think many of the legislative vehicles would, if adopted, would undermine the securities remit," Gensler added.
Regulatory agency says it has the authority (Score:2)
When was the last time the executive branch said, "Sorry, but Congress hasn't given us authority over that yet. We'll have to wait for new legislation."?
Consider their threat of a fight over stablecoins (Score:2)
The SEC apparently thinks it has authority to pursue stablecoins [cnbc.com].
I would love to see the SEC explain how BUSD, GUSD, USDC, etc. are securities rather than floating bank drafts. FFS, the way a stablecoin backed by a national currency work is that it functions as the equivalent of a check for that balance amount that just needs to be cashed by the firm that issued that block of coins.
There is virtually no difference between me sending someone 100 BUSD/GUSDC/etc. and writing a check, doing Venmo, etc. The only
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Are stablecoin issuers regulated like banks? Do they guarantee on-demand availability of every dollar of the stablecoins they issue? If not, they're not like bank drafts.
And WTF do you think a "floating bank draft" is, anyway?
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Nice FP branch, though I hope some folks get to some Funny jokes on clueless regulators. I don't do jokes (but I'm still stuck with doing Windows), but the obvious problem (and basis for jokes) is that the cryptocurrency scammers are completely free to rig their games around avoiding or evading the existing laws and regulations.
Hmm... How about a joke along the lines of "In America, everything is permitted unless explicitly forbidden and that's why they'll never catch up with the latest scams."
Or maybe some
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Congress has appointed the SEC as regulator for securities trading under the United States jurisdiction. SEC regulations apply to all securities.
Securities are not enumerated, they are defined:
A security is a financial instrument, typically any financial asset that can be traded.
Examples of securities are given, but not an exhaustive list.
If it walks like a duck...
The SEC needs new laws (Score:4, Informative)
This is a very good Twitter thread [twitter.com] that tracks the OG crypto case, SEC vs Ripple, and all of the things that are wrong with it. Ripple has just been piling up extra arguments as more cases have come in which push back on the SEC such as the Voyager bankruptcy case and the LBRY case being unable to jam the crypto square peg into the securities round hole neatly.
The SEC is very likely to lose its case against Ripple because of the precedent set in West VA vs EPA where the SCOTUS held that regulatory agencies that don't establish clear guidelines pretty much lose automatically on due process grounds. The fact is that the SEC has asserted the Howey Test selectively and hasn't offered anything a reasonable person would consider clear regulatory guidance that explains why certain cryptos are securities and some are not.
Fun fact that most anti-cryptobros on this site don't realize is that the SEC's case is in mortal danger precisely because Ripple got ahold of smoking gun documentation showing that the SEC considers BTC and ETH to be commodities but XRP is a security. Why? We don't know, and the SEC can't tell you because they haven't even made a half-assed ruling-making attempt that at least offers a herp-derpish "Proof of Work = commodity, Proof of Stake = security" level distinction that would at least be something resembling a starting point for regulatory comment-making feedback and guidance to regulated actors.
The fact is that the Howey Test really doesn't apply to crypto because owning crypto doesn't actually give you a stake in the network per se, let alone the org running it. Ripple's released some of their responses to the SEC on the Howey Test, which can be easily found online, and they're pretty savage burns on the SEC.
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Bitcoin fails the howey test. so does doge, but its a joke cryptocoin. all other cryptocurrencies pass the howey test.
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If there's any danger to the sec's case (Score:2)
Go over four prongs of the Howey test, crypto is very much security even Bitcoin. Oh I mean just except for reasonable expectation of profit. There's nothing reasonable without expecting a profit from crypto unless you're running as one of the pyramid schemes.
Crypto is going to go down not because we apply laws correctly but because there's a very real chance and peop
You don't even understand the Howey Test (Score:2)
That exists in Forex markets too, smart guy. We don't call holding a stack of Euros or Yuan a pile of securities just because someone expects to flip them for a profit. To be a security, all four prongs must apply.
It fails on prong #2: "In a common enterprise" and #4: "To be derived from the efforts of others"
There is no common enterprise and the expected profit is der
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The Howey Test does not limit, but rather expands the scope of regulated securities.
The so-called "Howey test" applies to any contract, scheme, or transaction, regardless of whether it has any of the characteristics of typical securities.
Hahahaha this is (Score:1)
Of course this doesn't
Re:Hahahaha this is (Score:4, Funny)
found the not-a-lawyer
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This is the time when I wished Slashdot had a laugh emoji
Everything is regulated. Anything that looks like a security can be regulated by the SEC, etc etc
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You do realize that "laws" are arbitrarily applied to new and unrelated contexts all the time, right?
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If it's not spelled out exactly, there's basically zero interpretation allowed, and the Supreme Court won't let it stand.
The correct course of action would be for the SCOTUS to refuse to hear a cryptocurrency case and recommend that congress get their act together on the matter. There are no previous real-world analogs for cryptocurrency which fit 100%. It is an entirely new financial concept and should be regulated as such.
It's not a security, it's not a freezer full of pork bellies, and it's not money in the bank. Cryptocurrency is cryptocurrency. It's a decentralized*, self-replicating (via mining or staking) asset tha
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Our whole system is designed to freeze things in place. There are good reasons for that. One of the best economies. Most powerful military. We're the place where most people want to emigrate to. We're far from perfect, but our setup is one of the best by a lot of metrics. Our system is designed to prevent extremists (from eithe
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Equating P.O.S. to "is a security" (Score:1)
He's trying to kill Ethereum, for example, which is arguably the greatest financial innovation of our time.
And he wants to do this by equating the proof-of-stake consensus/validation method with being a (United States-regulated) security.
Ethereum moving to POS achieved a 99% energy reduction in the operation of the cryptocurrency. And Gensler wants to stop that, forcing cryptocurrencies to stay with environmentally unjustifiable proof-of-work validation.
And he is totally unreasonably cla
yeah stop them b/c we are so far behind (Score:2)