U.S. has failed to regulate cryptocurrencies

the U.S. has dropped the ball regarding regulating crypto

U.S. has failed to regulate cryptocurrencies,Hester Peirce, a Securities and Exchange Commissioner, says that the U.S. has dropped the ball regarding regulating crypto. She says that the effects of this failure keep her up at night.

“There’s a lot of fraud in this space right now because it’s so popular…

The other thing that worries me is how we’ve dropped the ball on regulation,” Peirce told CNBC this week at the D.C. Blockchain Summit.

Peirce went on to say, “We’re not letting innovation and experimentation happen in a healthy way, and this has long-term effects.”

U.S. has failed to regulate cryptocurrencies

Hester Peirce, a Securities and Exchange Commissioner, says that the U.S. has dropped the ball regarding regulating crypto. She says that the effects of this failure keep her up at night.

There’s a lot of fraud in this space

U.S. has failed to regulate cryptocurrencies

This week at the D.C. Blockchain Summit, Peirce told CNBC, “There’s a lot of fraud in this space because it’s so popular right now.” “The other thing that worries me is how we’ve dropped the ball on regulation.”

She went on to say, “We’re not letting innovation and experimentation happen in a healthy way, and that’s going to have long-term effects.”

The comments are made as the cryptocurrency market continues to crash.

In just a few weeks, a significant sell-off of digital assets erased more than $500 billion from the market. Trouble partly caused this in a group of cryptocurrencies called stablecoins.

The name comes from the fact that the value of these digital currencies is tied to the price of real-world assets like commodities like gold or fiat currencies like the U.S. dollar. Stablecoins aren’t supposed to change their prices very much, so it’s usually not worth bringing it up when they do. But when UST, one of the most popular stablecoins backed by the U.S. dollar, went down, it spread to the rest of the cryptocurrency world. These shockwaves have also fired up lawmakers and regulators.

Peirce said, “We can go after fraud and play a more positive role on the innovation side, but we have to do it, we have to work.”

“So far, I haven’t seen us ready to do that work.”

The SEC’s job with crypto-U.S. has failed to regulate cryptocurrencies

U.S. has failed to regulate cryptocurrencies

When it comes to regulating cryptocurrencies, the SEC’s role is unclear.

Securities are regulated by Wall Street’s top regulator, Chair Gary Gensler. But, until recently, it was hard to get him to say which of the more than 19,500 cryptos he was responsible for and which were better left to the Commodity Futures Trading Commission to handle.

But Gensler recently told the House Appropriations Committee that the SEC has control over “probably a vast number” of the cryptocurrencies currently in use.

The head of the SEC also said that bitcoin “maybe” wasn’t in their area of responsibility, which he thought were strong words on the subject.

Gensler’s recent thoughts on how bitcoin should be regulated are similar to those of ex-SEC Chief Jay Clayton, who said that cryptocurrencies are “replacements for sovereign currencies” and that if you “replace the dollar, the euro, or the yen with bitcoin, that kind of currency is not a security.”

The SEC has spent the last few months adding more people to its team and expanding its role in regulating digital assets.

Gensler said in April that Wall Street’s top regulator plans to register and regulate crypto platforms. Earlier this month, the agency said it would almost double the staff responsible for protecting investors in cryptocurrency markets, bringing its Crypto Assets and Cyber team up to 50 dedicated positions.

“The crypto exchanges should come in and register,” Gensler said last week on Capitol Hill. “Or, frankly, we’ll keep using what Congress has given us to do our enforcement and examination work.”

U.S. has failed to regulate cryptocurrencies

Gensler recently told the House of Representatives that the rules are “actually pretty clear.” The SEC Chair says that you have security if you ask the public for money, and the public expects to make money because of the sponsor’s efforts.

Gensler says this is different from a commodity, which has neither an issuer nor a public buyer who expects a return based on the single person’s efforts behind the product.

A request from Congress for more clarity

But many people who took part would like lawmakers to be more precise. Peirce of the SEC told CNBC that even though the SEC is already acting with its power, “it would be helpful if Congress came in and said, ‘SEC, here’s what we think you should be doing. “‘CFTC, here’s your job.'”

“One could argue that the SEC would be a good federal regulator of retail exchanges, but again, that’s really up to Congress,”

Peirce said, adding that there is a lot of work to be done within existing authorities because traditional financial institutions want to get involved in crypto. “In order to do that, they need clear rules from us.”

After an attack in Texas that killed 19 children, Biden says the U.S. should “stand up” to gun makers.

Senators Cynthia Lummis, R-Wyo., and Kirsten Gillibrand, D-N.Y., want to clear things up with a bill that sets up a comprehensive framework for regulating the crypto industry and divides up oversight between regulators like the SEC and CFTC.

Lummis told CNBC that they hope this plan for regulating digital assets “strikes the right balance between clear and understandable rules and rules that don’t slow down innovation.”

But until Congress makes some strict rules about regulating crypto, the situation will stay the same.

Since 2017, when the SEC set up a unit to keep an eye on crypto assets, it has taken more than 80 actions against crypto asset offerings and platforms.

The agency’s lawsuit against Ripple, a new company based in San Francisco, could be a test case.

In 2020, the SEC said that Ripple, its CEO Brad Garlinghouse, and the company’s executive chairman broke securities laws when they sold $1.4 billion worth of XRP, the sixth-largest cryptocurrency in the world.

CoinGecko says that in the last 30 days, XRP has lost 42% of its value, which is in line with the general trend.

U.S. has failed to regulate cryptocurrencies

Ripple says that its token is not a security, adding to the confusion about which digital coins are regulated and which are not.

At one point, the ambiguity also included ether, the world’s second-biggest cryptocurrency by market cap. In 2018, an SEC director said that “the Ethereum network and its decentralized structure, current offers and sales of Ether are not securities transactions.”

How the Ripple case plays out in court could be a sign of things to come, and it could force the SEC to decide which of the nearly 20,000 crypto tokens it regulates it should regulate.

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