Gary Gensler, chairman of the Securities and Exchange Commission (SEC), spoke to the Wall Street Journal (WSJ) on Tuesday. The Terra debacle, the de-pegs of stablecoins and the Celsius lending platform freezing its customers’ assets, according to Gensler, highlights the need for rules and laws to protect the rights and interests of consumers in the US. He also called cryptos ??????highly speculative assets???? ???. The same words used by Christine Lagarde, President of the European Central Bank (ECB).
Last week we wrote that Senators Cynthia Lummis (Republican) and Kirsten Gillibrand (Democrat) introduced a bill to regulate bitcoin. The bill clarifies the legal qualification of bitcoin. For example, according to the bill, bitcoin should not be qualified as a security, but as a commodity.
The interview
Gensler already hinted a few months ago that most cryptos can actually be classified under the category of ‘ securities ‘. In the interview with the WSJ, he reaffirms his vision.
If a company wants to raise money, the company must be open and not mislead potential investors with marketing talk. Gensler concludes that most cryptos traded in crypto casinos have the characteristics of securities. He refers to the so-called Howey test from which the criteria of an ???? ??investment contract?? ????? derive.
Lending platforms and exchanges that offer exorbitant interest rates for stablecoins are also actually covered by the Securities Act, according to Gensler.
Not your keys, not your coins
In the interview, Gensler compares memestocks to memestocks. Memestocks are stocks that gain popularity and rise in price, not because of the good fundamentals of the company, but because of hype on social media (such as Twitter) or other online platforms (such as Reddit) . These shares are often priced too high and can rise enormously in a short time, but also fall sharply. Usually these stocks are popular among young investors (millennials). The term ‘meme’ refers to jokes or parodies in the form of a photo or video (such as a GIF). with the lending platform Celsius freezing its customers’ assets last Monday. Even during the memestockmania there were platforms from which you could temporarily not withdraw these shares. With stocks, there are rules and laws about segregation of funds that protect consumers. However, there are none with cryptos. He therefore calls for consumer protection to be introduced quickly.
Furthermore, Gensler said that the SEC is working with the Commodity Futures Trading Commission (CFTC) on the oversight of digital assets that qualify as commodities . Gensler says casually that bitcoin is a commodity. So for bitcoin, the CFTC will most likely become the designated regulator.
Bitcoin not crypto
The interview itself is not too exciting, but shows a trend of high-level distinction between bitcoin and crypto. In the bitter time when the bitcoin price is falling sharply, this offers perspective for the future.
If you want to know why bitcoin is the innovation and not cryptos, view Jack Mallers’ opinion here.
