Bitcoin: Will the SEC Regulate It?
Government authorities have been debating who should regulate Bitcoin for years (BTC 8.30 percent ). Some people think that the Securities and Exchange Commission (SEC), which regulates securities on stock exchanges, should have the authority to regulate the most valuable cryptocurrencies. Others claim that the Commodity Futures Trading Commission (CFTC), which currently regulates Bitcoin futures contracts, should be in charge of it.
Politicians and government representatives appear to be realizing that not all cryptocurrencies are created equal, even if the whole crypto industry is still in the sights of authorities.
The chairman declares.
SEC Chairman Gary Gensler was questioned about his opinions on the future of crypto regulation in the US during a recent interview on CNBC.
He clarified that one coin is distinct from the others while talking about the SEC's potential role in the regulation of cryptocurrencies. He believed that, in contrast to other cryptocurrencies that should be governed by the SEC, Bitcoin is a commodity and belongs within the purview of the CFTC. According to Gensler, it differs from other tokens available today in that it is not promoted by a particular set of business owners or developers in an effort to entice investors. Gensler indirectly emphasized the decentralized nature of Bitcoin, which is one of its distinguishing features.
Given that Bitcoin does not fulfill the requirements to be a security, Gensler thinks it is likely that the CFTC should have jurisdiction over it. Mr. Gensler undoubtedly has more knowledge on this topic than anybody else in the U.S. government given that he was also the previous head of the CFTC.
He not only presided over both organizations, but he also lectured on blockchain technology and cryptocurrency at the Massachusetts Institute of Technology. He is more than capable of handling these kinds of
Is it successful?
More intriguingly, Gensler's remarks concur with a bipartisan crypto bill that was recently introduced by Senators Kirsten Gillibrand of New York and Cynthia Lummis of Wyoming. The measure is undoubtedly one of the most complete pieces of cryptocurrency legislation, despite the fact that it has not yet been ratified.
The measure addresses a wide range of cryptocurrency-related topics, including stablecoins, mining, and - most importantly - which organization is in charge of regulating individual cryptocurrencies.
The Howey Test was used by the senators to decide whether the CFTC or the SEC should have control over a specific cryptocurrency under the bill. According to the Responsible Financial Innovation Act, cryptocurrencies that pass the Howey Test must register with the SEC in order to be traded on the stock market, just like any other security.
In order to determine whether an asset is a security and is consequently subject to SEC regulation, the Howey Test was developed as a consequence of a Supreme Court judgment from 1946. If there is a "investment of money in a joint venture with reasonable prospect of rewards to be received from the labor of others," the asset is regarded as a security.This implies that in the context of cryptocurrency, items like initial coin offers (ICOs), which make use of crowdsourcing in return for a token that investors hope will appreciate in value, are securities.
The bill's Title III specifies that the CFTC will be in charge of regulating cryptocurrencies that are entirely decentralized and fail the Howey Test.
This particular passage appears to have been written just for the most decentralized cryptocurrency in the world.
Investors ought to welcome this decision, not because the CFTC will regulate more effectively than the SEC or because Bitcoin will perform better under its control, but rather because even the highest-ranking agency officials are aware that they cannot regulate Bitcoin in the same way as other securities. Since Bitcoin was created as an antigovernment asset, it's almost like wearing a medal of pride that the government is finally acknowledging its decentralized nature.
Laws are coming soon.
The cryptocurrency ecosystem will undergo a significant transition in the upcoming years. Recent occurrences like the collapse of the Terra blockchain, the suspension of withdrawals by the bankrupt lending platform Celsius, and the bankruptcy of the cryptocurrency hedge fund Three Arrows Capital have created a precedent for government involvement to safeguard investors.
Investors in Bitcoin should have confidence that, despite regulation being in the works, it will treat the most decentralized cryptocurrency differently from other cryptocurrencies. Although Bitcoin will continue to function as it has since 2009, obscure tokens with well-known developers behind them may encounter challenging regulatory conditions.