- The SEC advances to fill the regulatory gap involving digital assets.
- It says there is no need for new legislation in the digital assets ecosystem.
- The regulatory body is empowered to perform oversight functions on all digital assets with no clear-cut rules.
Cryptocurrencies – and stablecoins – are largely considered non-stable and have recently been the driver of instability in the digital asset ecosystem.
It is on this premise that the United States (US) Congress is seeking to promulgate a comprehensive law for digital assets.
However, while they are caught in the web of how or whether to create new rules, the Securities and Exchange Commission (SEC) has identified and filled the regulatory gaps.
SEC becomes the major Crypto regulator
The SEC has been vocal about increasing regulation of the digital assets ecosystem. It, therefore, wasn’t surprising when the regulatory body corroborated the “regulatory gaps” identified by Joe Biden’s administration— and filled the vacuum.
Members of Congress had previously clamored for new legislation in the country that would cover all digital assets including. This move was supported by senior US regulators such as Secretary Janet Yellen but not the regulators’ chair, Gary Gensler, however.
Industry players say the reason it doesn’t want a new law is to keep its domineering stance in the ecosystem. There are insinuations that it continued to frustrate the new legislation process and fueled Treasury’s reluctance with constant objections and incessant revisions.
An anonymous one mentioned, “The regulator was fighting every bill in Congress, period,” alleging that they intended to sink the bill.
Without clear-cut laws, the regulatory body can proactively regulate and perform oversight functions.
Power to the SEC
Until new legislation is passed — that reduces or cuts the SEC’s regulation of digital assets — the regulatory body will continue to hold its position as a major regulator.
Interestingly, its move to fill the recently identified regulatory gaps empowers it to investigate and prosecute all firms involved in digital asset dealings.
For instance, in February, it sent a “Wells notice” letter to Paxos, the BUSD issuer, to inform the crypto firm of an ongoing investigation.
The regulatory body revealed that it is investigating a joint stablecoin project between Paxos and Binance. In compliance, Paxos said it has since discontinued the joint project.
Similarly, the regulatory body informed the crypto trading platform, Beaxy not to combine different traditional financial activities under one registration.
SEC says, “There are separate registration requirements for exchanges, brokers…” Therefore, Beaxy should follow the regulations and not put investors at risk.
There are other crypto companies like Genesis, Ripple and Gemini that the regulatory body has also clashed with.
The implication of these investigations and warnings is that the regulator has jurisdiction over all digital asset firms. They are empowered to investigate and inform the firms of their excesses.
In view of this latest development— the SEC filling the regulatory gap— it is difficult to contain the extent to which they have power in the US digital assets market.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information but will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.