The SEC considers it necessary to regulate exchange platforms
In an interview with the Financial Times, the director of the SEC, the American financial policeman, does not see the exchange platforms exist outside a “public policy framework”, in other words a regulation.
Appointed last January by Joe Biden, Gary Gensler is considered to have a rather positive opinion on cryptocurrencies, unlike his predecessor Jay Clayton. But he believes that the significant valuation of the cryptocurrency market, now estimated at $ 2,000 billion, cannot exist without a minimum of regulatory constraints.
For him, trading platforms are jeopardizing their long-term survival if they do not work hand in hand with regulators. The director of the SEC prefers to remain “technologically neutral”, considering that digital assets are no different from others and that, therefore, they must comply with the same legislation.
Gary Gensler goes even further, arguing that a well-defined legal framework protects against illicit activity while maintaining financial stability.
The director of the SEC adds that according to him, one cannot succeed apart from the company:
“History tells us, we don’t survive long away. Finance is ultimately a matter of trust. “
Gensler of course fails to say that illicit activities are primarily funded by fiat currencies, the name of which means “trust.” It will also be recalled that the creation of a trusted financial system, which does not require giving full decision-making power to an institution, is precisely the credo of cryptocurrencies. Can we really speak of trust when a financial institution unilaterally decides to print greenbacks?
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SEC appeals to platforms
Despite his observation, Gensler does not seem to have changed his mind about cryptocurrencies and is convinced that they are assets of the future. Rather than cast shame, the director of the SEC prefers to convince the exchange platforms to discuss with the American financial policeman.
Gensler would like Coinbase, Kraken and all platforms operating in the United States to apply for a controlled exercise authorization rather than begging forgiveness every time one gets slapped on the fingers.
Despite his position, Gary Gensler remains listened to in the crypto-asset sphere. Formerly a professor at MIT, he taught blockchain and cryptocurrencies to his students, emphasizing this innovative technological component. If his current job requires him to remain neutral, it would therefore be more in the perspective of supporting rather than prohibiting.
For the director of the SEC, regulation is essential, because the vast majority of transactions today take place through trading platforms. Above all, these transactions would be “95%” of pure speculation on the part of investors.
The director of the SEC is also looking at decentralized finance (DeFi)
Gary Gensler also mentioned DeFi, which would pose the same difficulties as centralized exchange platforms by operating outside any regulatory framework. If he welcomes the fact that investors can interact more directly, he would like the SEC to exercise authority over an entity like Uniswap.
For Gensler, the concept of DeFi is not really decentralization, as it would imply certain governance mechanisms or systems that come close to centralization. The name DeFi would therefore be inappropriate, because, according to him, it cannot exist without the intervention of a person or a group of people who created the user interface.
Gensler admits, on the other hand, that DeFi is less centralized than Wall Street. Above all, he is positive towards it, believing that it represents something interesting lying between the whole centralized and the whole decentralized. Will his knowledge of the field be positive for an industry that is still too poorly understood, or will it lead to too strict monitoring? Response in the coming months.
👉 Read – Uniswap Developers Subject to US SEC Investigation
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About the author: Benjamin Allouch
Formerly a lawyer specializing in personal data and digital law, I quickly became interested in Bitcoin, blockchain technology and their legal implications. I am now an independent consultant and writer in the field of cryptocurrencies and blockchain.
All articles by Benjamin Allouch.