Recently, the head of the section dealing with policy at venture capitalist Andreessen Horowitz (a16z) accused the SEC of going “rogue” against crypto, especially during crash periods.
This is reported by Forbes, which quotes verbatim Brian Quintenz’s statements that the SEC from this point of view is completely out of control.
Indeed, the risk that because of the SEC’s actions a new “crypto crash” could occur is there.
The SEC’s position
Current Chairman of the SEC, Gary Gensler, has repeatedly stated that only Bitcoin among cryptocurrencies is definitely a security. Indeed, he also recently reiterated that he believes that all Proof-of-Stake based cryptocurrencies, such as Ethereum, would be unregistered securities.
By now, the crypto industry sees Gensler as an enemy, i.e., someone who is trying to get in the way, although in reality he would appear to be a Bitcoin maximalist rather than a no-coiner.
It is worth noting that Quintenz was formerly a commissioner of the Commodities Futures Trading Commission (CFTC), which is the agency that is actually siding against the Securities and Exchange Commission (SEC) claiming that cryptocurrencies instead would be commodities.
There is some kind of clash going on between these two agencies, as both apparently seem to want to take on the task of overseeing the crypto markets, the former considering them commodities, the latter securities.
Thus the SEC’s position right now is not necessarily the same as that of the US government or Congress, so much so that some argue that sooner or later Gensler will have to let go.
It is no coincidence that Quintenz is asking the US to make a final decision on this, because the current uncertainty is not good for anyone.
The eventual crypto crash
The 2022 crypto crash has nothing to do with it.
But should the SEC‘s approach pass, there could be another one.
A distinction must be made though between the Bitcoin market and the altcoin market.
The Bitcoin market will probably go ahead anyway. What’s more, if altcoins were to suddenly become difficult to trade, Bitcoin could benefit, in the medium to long term, because a lot of investment and speculative capital could at that point move from altcoins to Bitcoin.
However, for altcoins, and thus for the crypto market as a whole, it could be a catastrophe.
In fact, what Gensler is advocating in its current state would involve the immediate withdrawal of all altcoins from all centralized exchanges operating in the US, and the closure of altcoin trading for US users on all other regulated exchanges around the world as well.
So starting with Coinbase and passing through Binance, only Bitcoin and stablecoins would remain for US users.
The fact is that the US is by far the largest market in the world for cryptocurrencies, and after any such decision, other countries could follow suit.
Altcoins would remain exchangeable in those countries where they were possibly not considered security, on decentralized exchanges, and on centralized exchanges that operate in defiance of laws.
Everyone against cryptocurrencies?
Putting aside Bitcoin for a moment, which has a life of its own, there are even those who believe that right now the inner non-crypto financial world has it in for cryptocurrencies (especially altcoins).
According to Blockchain Association CEO Kristin Smith, there seems to be a carpet bombardment against cryptocurrencies right now, with several legal experts pondering whether or not the US is an appropriate place to host crypto assets.
Unfortunately, the situation at the legal and regulatory level is still not completely clear, and this is what is keeping on their toes the hundreds, or thousands, of crypto companies based in the US, which is the main market for this sector.
In the meantime, the dreaded banking sector crash is convincing many people to invest some of their liquid savings in BTC, so much so that one million new Bitcoin addresses were created over the weekend.
Perhaps it is precisely the difficulties of the traditional banking sector that are prompting those in it to lash out at the crypto world, as Bitcoin begins to look like a possible alternative, albeit only in part and only for specific uses.
Is this basically a fearful reaction to a possible profound and imminent change?