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Burdening cryptocurrency markets with rules will discourage investors, warned Hester Peirce, one of two Republicans among the five commissioners governing the U.S. Securities and Exchange Commission.
“I am concerned that the initial reaction of a regulator is always to say, ‘I want to grab hold of this and make it like the markets I already regulate’,” Peirce said in a Financial Times interview.
“I’m not sure that’s going to be great for innovation,” she said.
Her comments conflict with the efforts of commission chair Gary Gensler and a bipartisan effort in Congress to align private digital currencies more closely with rules controlling conventional investment venues.
Gensler has called for greater investor protections in cryptocurrency markets and has asked Congress to decide which agency or agencies should oversee private digital money.
Regulators have sharpened their interest in cryptocurrencies after Bitcoin began the year trading below $30,000, shot to $60,000, fell back to $33,000, and was trading above $40,000 on 14 June.
In May, the U.S. treasury issued a regulation requiring any crypto transfer valued at $10,000 or more to be reported on tax forms.
Members of the Senate banking committee met 9 June to discuss the U.S. Federal Reserve’s plan to issue a national digital currency.
PUBLISHER’S NOTE: SEC chief Gensler has fretted that unregulated crypto markets offer too few protections for investors.
People who buy and sell cryptocurrencies are not investors. They’re speculators. Investors buy stablecoins, the value of which is tied to conventional assets, such as the dollar. Those investors should be able to count on a measure of regulation to assure some degree of stability in their portfolios.
In contrast, people who buy free-floating digital currencies have no claim on government agencies to provide stability in their gambles.
TREND FORECAST: As Peirce said, regulators are driven to regulate. Ultimately, some degree of regulation will fall over cryptocurrencies. The greater the burden of regulation, the less they will be vehicles of innovation and discovery.
Stability implies less volatile markets, which will be the result of the coming regulations – taming prices is good for investors, but of less interest to speculators.