- Newly-appointed SEC chairman Gary Gensler clarified that the agency does not have jurisdiction to regulate Bitcoin.
- The securities regulator is now urging Congress to make some key decisions around crypto regulation.
- Consumer protection could decrease fraud and manipulation on crypto exchanges.
The US Securities & Exchange Commission (SEC) told investors that they lack protections when they trade Bitcoin on cryptocurrency exchanges.
Only Congress can keep crypto investors safe
During a hearing held by the House Financial Services Committee, SEC chairman Gary Gensler highlighted that the trading of the leading cryptocurrency represents an oversight gap.
Although the hearing was originally about the GameStop short squeeze, Rep. Patrick McHenry asked what the regulatory body would do to ensure that the cryptocurrency industry was “vibrant with legitimate money and under the rule of law.”
Despite the SEC’s authority to regulate digital assets that the agency considers securities, Bitcoin does not fall within that jurisdiction. Gensler said:
There’s a lot of authority that the SEC currently has in the securities space, and there are a number of cryptocurrencies that fall within that jurisdiction. But there are some areas, particularly Bitcoin trading on large exchanges, that the public is not currently really protected.
The securities regulator emphasizes that Bitcoin is a commodity under the US law and is not subject to the SEC’s oversight. While testifying during the hearing, Gensler stated that the $2 trillion crypto market could benefit from greater investor protection.
The SEC chair added that Congress could consider bringing investor protection to crypto trading platforms.
It's only Congress that can really address it. It would be good to consider whether to bring greater investor protection to the crypto exchanges.
Given that digital asset exchanges do not have a regulatory framework provided by the SEC or the Commodity Futures Trading Commission (CFTC), Gensler suggested that Congress could “instill greater confidence.” Without robust market regulatory oversight on crypto exchanges, he argued that there is no protection against fraud or manipulation.
Gensler’s nomination was voted for by Senate members last month, and the hearing on GameStop was his first appearance as SEC chair. The crypto community has been watching his term at the agency closely since Gensler has more extensive exposure and experience to digital assets than his predecessors.
In March, Rep. McHenry introduced a new bill called the Eliminate Barriers to Innovation Act, which intends to address unresolved questions about how regulations affect the cryptocurrency market. The bill has been passed by the US House of Representatives and is awaiting the Senate and President for further approval.
Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Recommended Content
Editors’ Picks
Prisma price tanks 25% after nearly $9 million exploit
Prisma Finance (PRISMA) is being exploited, and the attacker has so far pulled $9 million in Ethereum from the borrowing protocol. Prisma asked vault owners to take the necessary steps to protect funds from the ongoing attack in an official tweet on X.
Meme coins gain traction after SEC’s partial win in Coinbase lawsuit: DOGE, SHIB, BRETT, POPCAT, BODEN
US SEC pocketed a partial win in its lawsuit against Coinbase, ushering a correction in crypto prices on Thursday. Despite the broad pullback, prices of meme coins like Dogecoin, Shiba Inu and Solana-based BRETT, POPCAT and BODEN increased.
Ondo moves $95 million worth of OUSG assets to BUIDL as tokenized fund attracts $245 million since debut
Ondo Finance (ONDO) announced on Wednesday that it's shifting about $95 million worth of its OUSG's underlying assets to the BlackRock USD Institutional Digital Liquidity Fund (BUIDL).
XRP price stuck below $0.65 resistance, Ripple lawsuit could suffer from Coinbase defeat
XRP price falls slightly to $0.61 on Thursday after its landmark programmatic sales ruling in July, which gave Ripple a partial victory against the US SEC, failed to reverberate in a similar legal battle between the regulator and crypto exchange Coinbase.
Bitcoin: BTC may have recovered, but is it out of the woods?
Bitcoin’s (BTC) upward momentum has shown a significant decline for the past two weeks or so. This development led to a bearish signal on the weekly and an uncertain outlook on the monthly.