Crypto faces the regulators

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perfect for a day In which the Securities and Exchange Commission is headed by Gary Gensler. pulled no punches In his congressional testimony, the main theme running through the Blockworks crypto conference on Tuesday was undoubtedly regulation.

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why it matters: The crypto world both hates and needs regulation in equal measure.

state of play: Few if any US crypto companies can say they are regulated by the SEC or any other national regulator, and have passed that agency’s scrutiny.

  • SEC complaint That crypto companies like Coinbase don’t come to him for regulation. Even though those companies deal every day in tokens that could be considered securities, even if Coinbase is a de facto exchange – and even if a thumbs-up from the SEC would provide a degree of legitimacy that would be extremely beneficial for both small and medium-sized investors, will be assured. Big.
  • crypto companies complain that they can’t stand to wait for regulatory approval based on decades-old securities laws, while the rest of the world moves forward with innovations like distributed exchanges, which don’t even have a corporate entity to regulate, or Even a nationality that can determine which country’s regulator to contact.

big picture: Existing players in the crypto space have experienced extreme volatility in the price of crypto assets, and the concomitant heavy speculative gains and losses. They have also witnessed a large amount of fraud, theft and other crimes. Today’s crypto investors do not perceive this as a safe place to park funds and do not feel that they require any kind of regulatory hand-holding.

  • a secure and reliable financial system, However, this is the destination many crypto companies claim to be inclined to, especially with the rapid growth of dollar-denominated stablecoins.
  • of note: The SEC’s most recent action, targeting Coinbase, came in response to an effort by Coinbase to create a beacon of security in the crypto world – a guaranteed savings account denominated in dollars.

Bottom-line: The larger the money, the greater the demand for clear rules and regulations from conservative investors. “DeFi people want TradeFi money, but they don’t want rules,” Ledger’s Joel Edgerton told the Blockworks conference. “It doesn’t work that way.”

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