The US Securities and Exchange Commission (SEC) has up until July 28 to figure out a crypto regulatory framework for protecting US citizens with an interest in cryptocurrency investments.
This is according to an open letter written to SEC chair Gary Gensler by the US Senior democratic senator for Massachusetts Elizabeth Warren. Speaking as the Chair of the Subcommittee on Economic Policy under the Senate Banking Committee, Warren, who is often publicly skeptical of cryptocurrencies, has given the SEC less than a month to detail its authority over cryptocurrency in the country.
According to the letter, Warren also wants to know whether Congress needs to intervene to ensure that the SEC has the proper authority to close the existing regulatory gaps that expose crypto investors and consumers to danger in the volatile crypto market.
“The harms to consumers as a result of this under-regulated market are real and continue to Proliferate in the absence of effective SEC regulations.”
Warren: Many Crypto-Exchanges Operate In Regulatory Grey Areas
Warren said that among other concerns, crypto exchanges are the primary concern about the emerging digital assets class. Not only can they disappear with people’s assets, but such exchanges can also escape federal regulation if the asset on offer doesn’t qualify as a security under federal law.
“Exchanges do not have a regulatory framework at the SEC or at our sister agency, the Commodities Futures Trading Commission and as a result, there’s really no protection around fraud or manipulation.”
This leaves exchanges only under the basic state-level regulations for payment services and money transfers, which are insufficient to oversee the sophisticated crypto transactions landscape, the letter highlighted.
“The lack of regulations ensures that investors have no way of knowing whether the trading volume and prices they report reflect real activity or market manipulation.”
What Is Warren Asking Of the SEC?
Warren said that since the crypto market is growing rapidly, basic protections are unsustainable, and the SEC needs to answer five questions in the three stipulated weeks. First, the SEC should elaborate on whether exchanges are “operating in a fair, orderly and efficient manner.”
Secondly, the SEC needs a standard definition for crypto-assets and highlights their differences to assets on the traditional stock market. Third, Warren wants the SEC to compare its authority over crypto assets to its authority over traditional market assets.
Additionally, what measures can the SEC take to regulate foreign exchanges like Binance which lack physical addresses but are available to everyone online?
”…to what extent is international coordination needed to address gaps in the regulation of cryptocurrency exchanges and ensure the protection of investors and consumers in the United States?”
Lastly, Warren said that the SEC should explain its understanding of DeFi and its stand on decentralized exchanges and the decentralized derivatives markets.
Read More: zycrypto.com