Appearing before the House Financial Services Committee on Thursday, newly anointed SEC Chairman Gary Gensler suggested that Congress should consider regulating cryptocurrency cryptocurrency exchanges.
“It’d be good to consider whether to bring investor protection to the crypto exchanges,” Gensler told Rep. Patrick McHenry. “And I think if that were the case—because right now the exchanges trading in these crypto assets do not have a regulatory framework, either at the SEC or our sister agency, the Commodity Futures Trading Commission—that could instill greater confidence,” he said.
“Right now, there’s not a market regulator around these crypto exchanges and thus there’s really no protection around fraud or manipulation.”
Gary Genslers response ? pic.twitter.com/LlEr0dsqoI
— Jeff (@ISO_XRP) May 6, 2021
Today’s hearing was mostly about the fallout from January’s GameStop short squeeze, but Rep. McHenry had asked about how Gensler’s SEC might bring more regulatory clarity to the world of digital assets and cryptocurrencies—something blockchain-conscious legal experts have been after for years.
Some see the lack of consumer protections from government regulators as a positive: the libertarian-leaning Bitcoin Bitcoin faithful tend to like the lack of guardrails. But it’s also part of why crypto trading remains risky. The SEC and Commodity Futures Trading Commission (CFTC) do oversee cryptocurrencies in some cases, but since Bitcoin, Ethereum, and other major tokens aren’t considered securities, the exchanges that trade them can often avoid the SEC entirely.
A recent report from the blockchain analytics firm CipherTrace pointed to an “inevitable” expansion of illicit activity in crypto as the space continues to grow.
Late last month, the House of Representatives passed a bill called the Eliminate Barriers to Innovation Act, which looks to address some of these issues. It was introduced by Rep. McHenry back in March.