By
Temitope Olatunji
April 24th, 2024
When asked about guidance on crypto regulation, Gensler reminded that crypto exchanges need to register with the SEC. But decentralized exchanges (DEXs) are also subject to regulations.
On Tuesday, the US Securities and Exchange Commission (SEC) Chairman Gary Gensler had a video conference with members of Congress. During the conference, Gensler told that the SEC has no plans to place a ban on crypto. According to Gensler, the US will not follow China in its tough policy. Instead, the government will focus is on ensuring that the industry complies with investor and consumer protection rules, anti-money laundering regulations, and tax laws.
Gensler said:
“It’s a matter of how we get [the cryptocurrency] field within the investor-consumer protection that we have.”
Gensler’s comments came as a response to Representative Member Ted Budd who has been observing China that has been on a “warpath” against cryptocurrency since 2013. As Gensler said, the US approach is completely different. Besides, he added that it is not that much in the power of the SEC to ban crypto as restricting cryptocurrency “would be up to Congress”.
When asked by Representative Member Jim Himes (D-Conn.) about guidance on crypto regulation, Gensler reminded that crypto exchanges need to register with the SEC. But decentralized exchanges (DEXs) are also subject to regulations.
He stated:
“Even in decentralized platforms – so-called DeFi platforms – there is a centralized protocol. And though they don’t take custody in the same way [as centralized exchanges], I think those are the places that we can get the maximum amount of public policy.”
Currently, the SEC views cryptocurrencies as securities. Meanwhile, the Commodities Futures Trading Commission (CFTC) has classified Bitcoin (BTC) and Ethereum (ETH) as commodities. Cryptocurrency derivatives are legally trading on public exchanges that the CFTC is overseeing. Cryptocurrency exchanges are also legal in the United States. They fall under the regulatory scope of the Bank Secrecy Act (BSA) and must implement Anti-Money Laundering and Know-Your-Customer programs.
China’s Approach to Crypto
China’s approach to crypto regulation is not friendly at all. Trading crypto-currency has officially been banned in China since 2019 but has continued online through foreign exchanges. However, this year, things became much worse for crypto enthusiasts.
In May, Chinese state intuitions warned buyers they would have no protection for continuing to trade Bitcoin and other currencies online. Next month, the government told banks and payment platforms to stop facilitating transactions and issued bans on mining the currencies.
In September, China finally prohibited crypto trading, saying all transactions were off-limits. In addition, China placed a ban on mining and even extended its crackdown to cover all information and financial services related to crypto.
As a result of such a policy, crypto miners started looking for new locations for their activity. And the most attractive places are Kazakhstan, Iceland, and Texas, US.