As we know, regulation has been threatening the crypto industry for several years. Failing to supervise and encourage initiatives on the blockchain, regulators are criticized for wanting to kill the industry by overly strict regulation. If the American regulator seems nuanced, the old continent seems wary of these new assets. The 2021 appointment of Gary Gensler as Chairman of the Securities and Exchange Commission (SEC) did not clarify the situation. To analyse.
Crypto: The risk of disappearance
For several years, entrepreneurs operating in the ecosystem have shown strong disagreement with regulators. Even in the United States, the following issue is at the center of controversy. Companies hope that digital assets will be treated as investment contracts that must be registered with the SEC and not as securities. Only, if a cryptocurrency is considered a security by a US court, it risks dying. Indeed, the exchanges should then remove the said digital asset from their platform since they do not have a national stock exchange license.
For the SEC, cryptocurrencies are securities
About two weeks ago, the SEC filed a lawsuit in federal court claiming that nine tokens listed on Coinbase are securities. Nevertheless, a misunderstanding arises from this qualification. Indeed, the SEC has not explained what differentiates these tokens from other cryptocurrencies. The SEC Chairman has publicly asserted that digital assets other than bitcoin (BTC) are securities. Following this complaint, Coinbase published a blog post titled “ Coinbase Does Not List Securities. End of Story (“Coinbase does not list securities. End of story”). The gap between industry and regulator therefore continues to widen, even in the United States.
Gary Gensler’s nomination: good or bad news?
In January 2021, President Biden named Gary Gensler as the new SEC Chairman. He had given a course on blockchain at MIT. Thus, private market participants hoped that it would bring more regulatory clarity by considering digital assets as securities. However, it is not the case. Indeed, this position is not only legal or financial, but also and above all political. It sits at the crossroads between a trillion dollar market and traditional financial services. In each political system, the network of influence of the traditional financial system is very powerful and its ability to influence political decision-makers no longer needs to be proven.
Today, companies must act and move forward despite regulatory uncertainty. Some try to defend themselves despite the limited legal leeway. In late June, asset manager Grayscale sued the SEC for not allowing the company to convert “Grayscale Bitcoin Trust (GBTC)” into a spot bitcoin exchange-traded fund (ETF). It is a bitcoin-based investment vehicle launched in 2013. This conversion would make investing more accessible to the average American investor.
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