- Gary Gensler, the SEC chairman, was asked recently whether the agency would follow China in banning cryptocurrencies.
- Gensler asserted that the regulator would not ban digital assets, but the decision would be up to Congress.
- The agency continues to keep an eye on stablecoins which have grown tenfold in the past year.
The United States Securities & Exchange Commission (SEC) chairman Gary Gensler stated that the regulator has no plans to ban cryptocurrencies. The agency’s head was asked on October 5 whether the financial watchdog would follow in China’s footsteps by prohibiting digital assets in the country.
Gensler: Crypto still poses systemic risk to economy
During the October 5 hearing, Gensler said that the United States would not follow China’s move to ban digital currencies. He reiterated that the government’s focus is to ensure that the crypto industry adheres to investor and consumer protection rules, anti-money laundering regulations and tax laws.
During the hearing, the SEC head’s remarks echoed his previous thoughts on cryptocurrency regulation, including the requirement for digital asset firms to register with the agency. Gensler added that while crypto exchanges would need to register with the securities regulator, decentralized exchanges would also be subject to similar regulations.
The SEC chairman further explained his stance on stablecoins, stating that they could pose a systemic risk to the economy. Gensler previously referred to stablecoins as “poker chips” at the casino. Since there are approximately $125 billion of stablecoins, if the market continues to grow this could present systemic wide risks. The market grew about tenfold last year alone.
Gensler highlighted that the SEC’s approach is “quite different” from the Chinese government and that a ban of any kind on digital assets would have to be legislated by Congress.
China issued its strictest ban on cryptocurrency trading last week after forcing mining operations out of the country earlier this year. All digital asset transactions are considered illicit financial activity, including services provided by offshore exchanges.
China's government officials have further cracked down on digital asset trading due to fraud, money laundering and excessive energy usage. However, the country has continued to roll out its central bank digital currency (CBDC).
It appears that after Gensler’s statement, confidence in the market rose as the world’s largest cryptocurrency, Bitcoin, has climbed nearly 5% in the past 24 hours, reaching a swing high at $51,884.
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