During a hearing on Tuesday, SEC Chairman Gary Gensler informed the House Committee on Financial Services that the SEC did not have any plans of banning crypto. Gensler further stated that any decision to ban crypto would be left to Congress and not the SEC.
No Plans To Follow China’s Lead
Rep Ted Budd, a known supporter of crypto and a member of the Congressional Blockchain Caucus, asked Gensler if the SEC had any plans of following China and ban cryptocurrency in favor of a central bank digital currency (CBDC). To this, the SEC chair replied that the SEC had no plans to do so and that a ban would be “up to Congress.”
Gensler’s assertion that the SEC has no plans to ban cryptocurrencies is similar to the stand taken by Federal Reserve Chair Jerome Powell, who told the House Financial Services Committee last week that the Fed did not plan to ban the $2.2 trillion asset, class.
A Growing Debate
Pointed questions from Congress regarding the SEC’s growing efforts to regulate crypto come at a time when there is a growing debate about how crypto, and also stablecoins and cryptocurrency exchanges should be regulated.
Gensler answered several questions about stablecoins, cryptocurrencies, crypto exchanges, and decentralized finance (DeFi) and how they would be regulated. The SEC chair mostly reiterated what he had already stated about cryptocurrencies and their regulations and that crypto exchanges needed to register with the SEC. He also spoke about stablecoins and that most cryptocurrencies fell under the definition of “security.”
Exchanges Need To Register With The SEC
Rep Jim Himes asked the SEC chair to provide some guidance on crypto regulation, to which Gensler reiterated his previous position that crypto exchanges needed to register with the SEC. He further added that even decentralized exchanges would also be subject to SEC regulations.
“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.”
Stance On Stablecoins
Gensler also elaborated on his thoughts about Stablecoins, which he had referred to as “poker chips” at the crypto casino. He doubled down on his analogy in response to questions, stating that he viewed stablecoins as a risk to the economy.
“The $125 billion of stablecoins we have right now are like poker chips at a casino,” Genser said. “I do think that if this continues to grow – and it’s grown about tenfold in the last year – it can present those systemic wide risks.”
This statement comes after reports surfaced that USDC stablecoin issuer Circle was served by an “investigative subpoena” by the SEC’s Enforcement Division.
No Blanket Ban On Crypto, Says Federal Reserve Chairman Jerome Powell
Talking about the cryptocurrency market and its necessary regulatory frameworks during a session at the US House Financial Services Committee, Federal Reserve Chairman Jerome Powell admitted that a blanket ban on Bitcoin and other digital currencies was not an option for the Fed. Powell stated the response in reply to a question posed by the Republican Representative Ted Budd, a known supporter of crypto and digital assets.
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