If there’s one key theme running through most news stories in the digital currency markets this past couple of years, it’s been the ever-creeping inevitability of regulation.
Recently, we saw more evidence of this when SEC Chairman Gary Gensler called for digital currency trading and lending platforms to be regulated like stock exchanges.
What exactly is Gary Gensler calling for?
“I’ve asked our staff to work directly with platforms to get them registered and regulated much like securities exchanges, and to ensure that those crypto tokens come in as well and register where appropriate, as securities,” Gensler says.
Gensler has been adamant that it’s time for the Wild West era of the digital currency markets to come to an end. He’s been a vocal proponent of stricter regulation from the moment he sat in the bosses’ seat at the commission. Under his watch, several high-profile investigations against the likes of Ripple Labs and Coinbase (NASDAQ: COIN) have been launched or continued at pace.
In his latest public statement, Gensler called for digital currency exchanges and lending platforms to offer the same consumer protections as stock exchanges. His comments were made in the wake of a digital currency market meltdown of severe proportions; several lenders, including Celsius Network and Voyager Digital, filed for bankruptcy amidst the recent crash, leaving retail investors out of pocket and with nowhere to turn.
In the context of this destruction, Gensler’s comments and calls for stricter regulation are likely to go over well with many who would have been against more regulation not long ago. They come amidst a wave of regulatory responses to the recent crash, including investigations into Coinbase for potentially listing unregistered securities, the U.K. Law Commission calling for the creation of a new class of personal property to strengthen consumers’ property rights as related to digital assets, and official investigations into Three Arrows Capital, Terraform Labs, and others.
Analysis: Who’s against stronger consumer protection?
As stated a little earlier, Gensler’s calls for greater consumer protection will likely have more popular support today than they would have six months ago. Massive fraud, unprecedented crashes, and innocent retail speculators getting wiped out en masse will cause a change in the mood quicker than it might otherwise occur.
Yet, still, even after all of the pain, chaos, and carnage of the last few months, there are ideological extremists who call for a totally hands-off approach by governments.
Our opening offer for a settlement is the complete abolition of the SEC and 10 years in jail for Gary Gensler
— LBRY 🚀 (@LBRYcom) July 28, 2022
Statements like these get the industry a bad name and likely put major enterprises off entering the space. The number of likes this Tweet received is telling.
It’s time industry players, traders, speculators, and others started asking; who stands to gain from a totally unregulated digital currency industry? It certainly isn’t everyday consumers with simple hopes and dreams of making a few bucks. Again and again, they get laid to waste as crooks and criminals bleed them dry.
While it’s true that regulation can and sometimes does go too far, strangling innovation in the process, basic protections for consumers who deposit onto exchanges, KYC/AML checks to keep crime out of the industry, and simple, clear rules to keep the wolves at bay shouldn’t be up for debate; they should be obvious solutions to a problem that keeps manifesting itself in new forms every couple of years. The QuadrigaCX victims certainly could have used regulations like these to protect their interests.
Like it or not, Gensler is right; exchanges should be regulated like stock exchanges. The only people who have anything to fear from such common-sense rules are crooks, fraudsters, and those who don’t want to be held financially accountable if their exchanges and platforms go toes up.
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