U.S. Securities and Exchange Commission head Gary Gensler says he believes the technology underlying cryptocurrencies is beneficial.
In a new interview with the Washington Post, Gensler says that blockchain technology, which gained its present-day prominence after the mysterious Satoshi Nakamoto created Bitcoin (BTC), is helping to improve payment systems.
“Nakamoto-san’s innovation, not only Bitcoin as the first sort of one, but this whole distributed ledger technology, has been a catalyst for change around the globe. Central banks and the private sector are looking in on how we can enhance our payment systems. And [in a way] to make them 24 hours a day, 7 days a week, real time, at lower cost.”
Blockchain technology is also spurring innovation in the markets and banking, according to the SEC chair.
“I also think it’s raising new and interesting innovations around how exchanges work and even potentially some forms of decentralized lending.
We’ve had peer-to-peer lending for 15-20 years, we’ve experimented with it. This is a new type of experiment. So, those are really interesting innovations challenging the established business models.”
Gensler also says he believes stablecoins, which are designed to maintain a constant value, are similar to “poker chips” and the need exists to regulate them before problems arise.
“These stablecoins are acting almost like poker chips at the casino right now. So, add to the Wild West analogy. I mean, we’ve got a lot of casinos here in the Wild West, and the poker chip is these stablecoins at the casino gaming tables.
And so, I think there’s just a lot of warning signs and flashing lights that we might have a spill in aisle three, and I’d rather get ahead of it.”
SEC Chair: Innovation Around DeFi “Could Be Real”
Gary Gensler believes that DeFi could offer “real innovation,” but he is convinced that the sector will not survive without regulatory compliance.
U.S. Securities and Exchange Chair Gary Gensler said that new technologies do not tend to persist if they fail to come into compliance with the law during a fireside chat with Jay Clayton at the Digital Asset Compliance & Market Integrity Summit.
While Gensler believes that decentralized finance could be the source of innovation, he claims that it has to fall within the existing regulatory framework:
The innovation around DeFi could be real, but they won’t persist if they stay outside of the regulatory framework.
Gensler also voiced his concerns about the centralization of some DeFi projects and implied that the goal of such projects might be to skirt existing anti-money laundering laws.
Speaking of the regulator’s reluctance to approve a spot Bitcoin exchange-traded fund, Gensler told No. 42 that trading around the globe is not inside the U.S. regulatory register. He urged the trading and lending platform to “come in and talk”:
Trading and lending platforms are really in an important place for investor and consumer protection. Come in and talk to us… work with us. Where appropriate we’ll use the enforcement tool. Work to get registered with the law.
The SEC boss has reiterated that stablecoins remind him of poker chips at a casino:
[Stablecoins] made it more efficient within the ecosystem. But it also allowed people around the globe, the people who tried to, to avoid money laundering and tax compliance in jurisdiction after jurisdiction.
According to Gensler, stablecoins are responsible for 80% of trading on the crypto market.
SEC Commissioner Will Not Say If Ether Is a Security
The SEC remains mum about Ether’s regulatory status amid accusations of picking winners and losers that come from the increasingly frustrated XRP community.
U.S. Securities and Exchange Commissioner Hester Peirce did not answer whether or not Ether, the second-largest cryptocurrency, is a security when asked by her Twitter follower.
Rather than analyzing the status of particular assets, I need to focus on building a sensible and clear regulatory framework for crypto.— Hester Peirce (@HesterPeirce) November 21, 2021
The “Crypto Mom” says that she is willing to build a “sensible and clear” regulatory framework for cryptocurrencies, but she will not focus on particular digital assets.
As reported by U.Today, SEC Chair Gary Gensler has repeatedly dodged the very same question on numerous occasions, making it clear that he will not speak about separate cryptocurrencies to remain neutral.
At the same time, the agency has distanced itself from a 2018 speech made by its former top official William Hinman, in which he famously said that Ether is not a security.
Amid the SEC’s almost year-long legal battle with Ripple, calls for regulatory clarity continue to persist.
Last month, Ripple CEO Brad Garlinghouse opined that Ether had managed to surpass XRP by market capitalization because of the SEC’s “free pass.”
Peirce, despite being a staunch crypto supporter for years, has refused to speak about the Ripple case since SEC Commissioners are prohibited to speak about ongoing litigation or enforcement actions.
SEC hawk eyes now on Terra Mirror Protocol and Its CEO Do Kwon for allegedly ignoring several subpoenas
- The Terra blockchain co-founder Do Kwon and the Terraform Labs are now on the SEC’s radar for allegedly repeatedly failing to respond to its subpoenas.
- Kwon says he is surprised by the lawsuit and he has also filed a lawsuit against the regulator for its ‘inappropriate’ serving.
The US Securities and Exchange Commission (SEC) is staying true to its promise of battling alleged unregistered securities as shown by its latest action against the Terra blockchain. The regulator is now going after Terraform Labs – the company behind Terra, and its co-founder and CEO Do Kwon.
As per the litigation release, the SEC delivered to Kwon a series of subpoenas, which he has failed to address. The regulator now seeks to compel the company to comply with the summons that petition for Kwon’s testimony. The investigative subpoenas also call on the production of several documents by Terraform Labs.
Launched in December 2020, Mirror Protocol is a DeFi protocol built on Terra’s blockchain. It is used to mint, issue, and trade synthetic versions of stocks, or Mirrored Assets (mAssets), which track the price of real-world assets. For instance, rather than purchasing Tesla shares, one can buy mTSLA. These assets, according to Kwon, ease global investors’ access to the US equities market.
Terra Blockchain and the SEC
Following investigations, the regulator now has reason to believe that Terraform Labs and Do Kwon “participated in the creation, promotion, and offer to sell mAssets and MIR tokens to U.S. investors.” Such actions are likely in violation of US federal laws which forbid the selling or offering of unregistered securities or being an unlicensed securities broker. Nonetheless, the litigation release reads that:
The SEC is continuing its fact-finding investigation and, to date, has not concluded that any individual or entity has violated the federal securities laws.
Should the SEC produce any confirmation of these speculations, Terraform and Kwon would find themselves in a similar fate to Ripple Labs and XRP.
In retaliation, the Terra CEO has filed a lawsuit contesting the environment in which the subpoenas were served. Kwon was served the documents while presenting at a September Messari Mainnet cryptocurrency conference in New York. The happening became the subject of the Crypto Twitter buzz with many wondering who exactly got served.
According to Kwon’s legal counsel, such delivery was illegal since it took place in public. This, the legal advisory says, is an infringement of the SEC’s policy that states that serving should happen confidentially.
Additionally, Kwon’s filing says he has been in communication with the SEC since some time ago. The commission’s actions, therefore, come as quite a surprise to him.
MIR and LUNA price movements
The Mirror Protocol token, MIR, was trading at $3.11 at press time, having lost 2.5 percent in the day per our data. The token hit its all-time high around mid-April when it traded at $12.40. Terra, the stablecoins ecosystem which recently introduced an 88.7 million token burn, saw its native token trading at $51.02, down 0.3 percent in the day.