Cryptocurrencies like Bitcoin are a popular financial frontier, but to Gary Gensler, the U.S.’s top market watchdog, they lack definitions and rules and he is looking to take action.
In a recent speech, Gensler, the head of the Securities and Exchange Commission (SEC), denounced the lack of transparency and clear regulations in cryptocurrencies and said that the commission would take action to protect investors, which is a central part of the SEC’s mission.
Clearer definitions are one of the main problems.
Since cryptocurrencies are relatively new, there are still no universal definitions for some of the most basic terms. Can assets traded on cryptocurrency exchanges be called securities, or are they something completely different? Is Bitcoin a commodity?
A unified global definition of terms can determine which regulator has the authority to regulate cryptocurrencies and related assets.
So far, the SEC and the CFTC have shared regulatory responsibility: they have tried to police cryptocurrencies with laws that are already in place, when they were actually written for other traditional forms of investment, such as stocks or bonds.
This will continue until there are new, cryptocurrency-specific regulations for the virtual currency market.
But Gensler has pushed Congress to give regulators the authority to enact new rules.
He also called for more resources, more money and staff to regulate cryptocurrencies. For years, senior officials at the SEC and the CFTC have complained that Congress has not given them enough resources to do their jobs efficiently.
Congress, too, is proposing new regulations: the Senate has included a provision in its latest infrastructure bill that tightens tax enforcement of cryptocurrencies, though their fate remains uncertain because the House has not yet approved the legislation.
Supporters of the cryptocurrency industry are trying to defy Senate rules, calling the crackdown too far-reaching.
But many believe that new rules could help cryptocurrencies become a bigger part of daily life.
For more information, read the original story in NPR.