Especially after the various cryptocurrency crashes, the focus of the regulators has been concentrated on Bitcoin and altcoins. In particular, moves towards regulation are coming from European and US regulators. In this article, we will talk about the latest comments on the US Securities and Exchange Commission (SEC)’s stance the other day. We will also share the latest arguments and regulatory efforts towards cryptocurrencies in the US Senate…
Senate Banking Committee Chairman wants to regulate cryptocurrencies
Senator Sherrod Brown, chair of the Senate Banking Committee; It is seen as the cornerstone of legislation to establish oversight of the cryptocurrency industry. While it has become clear at the hearings that he is a crypto skeptic, he has remained quiet so far with his plans for specific laws. However, Brown sent a letter to US Treasury Secretary Janet Yellen on Wednesday.
In the letter, he expressed his desire to work on a law for the first time. In addition, the text outlined how this law should be. Many factors were mentioned, including the comprehensiveness of his approach and the financial institutions involved. Brown highlighted the findings of a report from the Yellen-led Financial Stability Oversight Council. He then used the following phrases:
Individual regulators currently generally do not have a comprehensive view of the activities of crypto-asset assets. There must be authorities so that regulators can view and otherwise audit the activities of affiliates and subsidiaries of crypto-asset assets.
FTX collapse is a call to action for Brown
He said he wanted to “work on legislation like this,” especially in light of the collapse of crypto exchange FTX, which destroyed the investment of many Americans. He noted that while legislative work continues, U.S. financial institutions must maintain strong enforcement measures. He also said he needed to “take on substantial non-compliance with existing laws among crypto-asset firms.”
But Brown’s words do not reveal his views on current legislative efforts. For example, his position in a bill to regulate stablecoins will be key. Because such a bill would probably need his support. Brown did not openly share his view on broader efforts, such as recommendations from prominent members of the Senate Agriculture Committee.
Brown’s skepticism about cryptocurrencies clarified
Meanwhile, in Wednesday’s FDIC speech, Brown once again clarified his crypto doubts. “We cannot allow thousands of risky and volatile assets to enter our banking system, used only to evade speculation and sanctions. “We know this is a national security issue,” he said. Yellen spoke about the crisis with FTX at a separate event on Wednesday. This proves that the industry needs to have strong rules, she said. However, he noted the lack of such a regulation.
“To the extent that the crypto world can provide faster, cheaper, more secure transactions, we must be open to financial innovations,” he said at the New York Times’ Dealbook Summit in New York. Also, Brown asked candidates at Wednesday’s hearing, “Is there any public purpose to use cryptocurrencies right now?” she asked. Travis Hill, a politician nominated by President Joe Biden to become FDIC vice chairman, said, “At the moment, much of the public crypto promise is future-proof. As of today, most of these are theoretical and not part of everyday life.”
Senators are skeptical of cryptocurrencies
Another Republican board candidate, Jonathan McKernan, suggested that the FDIC, one of the three main banking regulators in the US, may not be as relevant as the US Securities and Exchange Commission and the Commodity Futures Trading Commission to manage crypto oversight.
Apart from Brown’s views, other Democrats have also opposed the banking system’s exposure to cryptocurrency risks. “I don’t want to give credibility to cryptocurrencies by regulation,” Senator Jon Tester said. Senator Elizabeth Warren talked about what would have happened if the wishes of crypto supporters had been fulfilled. Warren used the following statements:
If a group of FDIC crypto-assured banks could hold FTX’s tokens on their balance sheets, accept crypto tokens as collateral for loans – wouldn’t our banking system be less reliable?
SEC won’t be aggressive on BlockFi
On the other hand, there has been a comment on the SEC’s stance on BlockFi, which has recently declared bankruptcy. The SEC could use the failure of crypto lending platform BlockFi as an object lesson on why the crypto industry needs clear supervision. As we reported as Kriptokoin.com, BlockFi still has $30 million in debt remaining from a $50 million penalty.
According to Howard Fischer, a former SEC senior litigation attorney who is now a partner at New York-based law firm Moses Singer LLP, the SEC will not be as aggressive as others in getting that money back. He said the SEC is more interested in setting clear regulatory standards for the crypto industry. “The message the SEC will want to send, and is trying to send, is more about how we regulate a very young industry than the sanctity of SEC agreements,” Fischer said.
He said the failure of the FTX crypto exchange has brought about the need for crypto companies to use the same “metrics and management techniques” used by traditional and legal finance companies. Fischer said that BlockFi’s move to bankruptcy court puts more emphasis on the need to protect individual investors who appear to be the last to get any repayments. According to Fischer, the SEC is not directly “hostile” to the crypto-asset industry, but rather skeptical.
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