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Gary Gensler, chair of the U.S. Securities and Exchange Commission (SEC), has overstepped his authority in his attempts to regulate cryptocurrencies, according to Tom Emmer, a Republican member of the House of Representatives from Minnesota.
Emmer is a member of a group of legislators interested in crypto, known informally as the blockchain caucus. His charge is part of a GOP push against Gensler’s attempts to further regulate the $21-trillion crypto market, according to the Financial Times.
We detailed Gensler’s views on controlling digital currencies in “SEC Chief Sets Regulatory Sights on Cryptocurrencies” (10 Aug 2021).
Interest and investments in crypto have soared in recent years and especially during the COVID War, drawing regulators’ concerns as unwary investors have jumped in.
Regulators in various countries have sought to clamp down on the digital coins, noting that they can easily lure naïve investors and also cloak money-laundering and other crimes.
Gensler has sought to bring cryptocurrencies more closely into the regulations governing regular securities.
“I disagree with [Gensler] strenuously when he suggests that almost all of these [crypto] products are securities,” Emmer said to the FT. “I think the vast majority of cryptocurrency offerings or related offerings are actually currencies or commodities.”
“The SEC is not involved” in regulating things that are neither securities nor commodities, he noted.
“If the SEC were to deem one of these coins a security, the value of that token would plummet and those retail investors would be seriously hurt,” Emmer added. “That’s directly the opposite of [Gensler’s] mission and authority.”
SEC member Heather Peirce said earlier this year that regulating crypto would hobble innovation, as we reported in “Regulator Calls for Few Rules on Cryptocurrencies” (15 Jun 2021).
The blockchain caucus has introduced several bills in Congress that would make trading crypto easier in various ways.
TREND FORECAST: We noted in “Regulator Calls for Few Rules on Cryptocurrencies” (15 Jun 2021) that regulators are driven to regulate. Cryptocurrencies will fall under some form of regulation—probably not as much as Gensler would like, but more than Peirce or Emmer would endorse.
As we said in “Regulators Urge Tightest Rules for Crypto” (15 Jun 2021) and elsewhere, as governments introduce stablecoins—digital coins whose value is tied to national currencies—investors will gravitate to their stability, while speculators will continue to gamble on less restricted cryptos.
The regulated market will give legitimacy to cryptocurrencies, while the less-regulated market will give play to fun-seekers and remain the territory of innovation.