During a CNBC interview at the Squawk Box, US SEC Chairman Gary Gensler made important statements about Bitcoin being likened to commodities, and cryptocurrencies that would be like securities.
These definitions are important, especially when we think that the SEC and CFTC want to regulate cryptocurrencies, and to do so they will probably start with existing laws that will extend to crypto assets as well.
Cryptocurrencies as securities?
According to the Chairman, cryptocurrencies are highly speculative assets, not only because of recent performance, but because of all the data accumulated by the CFTC and SEC that have been monitoring the trends of some digital currencies for some time:
“The public is hoping for a return, just like when they invest in other financial assets we call securities. Many of the crypto-financial assets have the key attributes of a stock”.
These are the words of the Chairman, who therefore believes that some cryptocurrencies would be comparable to securities. In contrast, for Gensler, Bitcoin would be a commodity and not a security, as other US officials have long argued.
The regulation of stablecoins
The moment is very hot for a discussion of crypto, both because of the concern raised by the markets that seem to be increasingly affecting this asset and because of the failure of the Terra-Luna ecosystem.
Stablecoins seem to be a minefield, and America would like to open up to any new instrument, including cryptocurrencies, but it is important for the country to regulate and for these coins to comply with what has been established by the relevant authorities.
In a report compiled in November by the SEC, Working Group of Financial Markets (PWG) and the US Crypto Watchdog, it was found that:
“Stablecoins, or certain parts of stablecoin agreements, may be securities, commodities and / or derivatives”.
These amount to about 150 billion in the crypto market, and the trend is growing to the point that they are increasingly attracting the attention of regulators and the SEC.
Although they represent only a tiny percentage of crypto assets, stablecoins experienced such a surge in trading last winter that they can no longer be ignored.
The main concern is that they may provide valuable support for bypassing a number of public policy objectives related to traditional banking and finance such as anti-money laundering, tax compliance, penalties and other protections against illicit activities.
“There is a lot of risk in cryptocurrencies, there is also a risk in classic stocks. In the US we have the CFTC and SEC market regulators to help protect the public from fraud and manipulation in the market”.
Gensler echoing Clayton
As early as last year, the Aspen Security Forum questioned the SEC about the crypto world urging regulation, and the SEC explained how individual cryptocurrencies should be treated in the same way as stocks.
The Security and Exchange Commission referred to a 2018 statement by former SEC Chairman Jay Clayton in which he said:
“To the extent that digital assets like (initial coin offerings or ICOs) are securities and I believe every ICO I have seen is a security, we have jurisdiction and our federal securities laws apply”.
In a nutshell, they must be regulated and cannot be allowed to alter the system precisely because the priority is market stability, the success of the country’s financial policies and investor protection.
Bitcoin a commodity but no ETFs?
Even for the new President Gensler, Bitcoin is the only crypto that can be considered a commodity, and this in addition to impacting the markets has also sparked discussion on the web.
— Bitcoin Archive (@BTC_Archive) June 27, 2022
On Twitter, Bitcoin Archive ironizes how it is both peculiar and hypocritical to consider BTC a commodity but not treat it as such when referring to the non-approval of ETFs.
The Bitcoin-related spot ETF was a much-anticipated tool for investors, one that would have expanded the range of instruments on offer and would have gone in the direction of normalizing the asset.
This sparked the mobilization of the web, which with more than 11,400 letters of support for the new instrument devised by Grayscale, brought to light a thirst for crypto ETFs and new instruments by investors.
Clear rules are welcome therefore, but as long as it leads to full use of all instruments with the volumes that the market will naturally want to flow into crypto assets, which have recently approached the trillion mark in terms of capitalization again.