The US Financial watchdogs, i.e. the Securities and Exchange Commission (SEC) demands all crypto trading platforms register themselves with them. However, the latter feels differently about this matter and this issue gave rise to an area of contention.
The SEC Chairperson – Gary Gensler Calls Digital Asset as “Securities”
The SEC puts forth its argument and believes that the crypto exchange platforms are delivering security services in form of cryptocurrency or “digital assets”; they can’t provide such service without the proper authorization by the watchdogs.
Initially reported that the US SEC’s Gary Gensler spoke in a conference, where he requested the US Congressmen to grant more power to the SEC in this matter. However, they want to make it an obligation for crypto exchange platforms to register with the US SEC.
Gary Gensler also emphasized the mishaps that may be a result of the operations of these crypto exchange platforms being unregistered.
The SEC Chairperson, Mr. Gensler said, “This asset class is rife with fraud, scams, and abuse in certain applications.” He further added that “we need additional Congressional authorities to prevent transactions, products, and platforms from falling between regulatory cracks. If we don’t address these issues, I worry a lot of people will be hurt.”
“I fear that if the field, which I studied for 3.5 years at MIT, stays outside the public policy framework for Anti-Money Laundering (AML), investors protection, and tax fraud … it is not going to persist,” said Gary Gensler.
Although Gary Gensler is persistent in terming the crypto products delivered by these crypto exchange platforms as “securities”. The latter disagrees. For example, Coinbase – a popular American crypto trading platform widely used among cryptocurrency investors, denies that their products can be classified as “securities”. Therefore, they don’t feel the urge to register themselves with the SEC.
Although many crypto exchange platforms desire to work along with the watchdogs to remain in compliance, the area of contention arrives at the definition of the digital asset class both the parties are assigning.
Lately, a report was launched that the SEC was taking steps to sue Coinbase if it launched its new service product called Lend. The organization, which has broadly been at the bleeding edge of cooperating with the regulators, whined that the SEC didn’t explain how or why it considered its new item a security asset.
Coinbase itself found out that the new item didn’t fulfill the Howey test. The Howey test was set up by the US Supreme Court to decide if something was monetary security or not.
While the regulators have been putting constant effort to curb down the utilization and proliferation of cryptocurrencies and virtual assets. Many nations have embraces the developing technology with open arms.
Also Read: SEC’s Next Regulatory Target: Defi