Gary Gensler. Source: a video screenshot, Youtube / Bloomberg Markets and Finance
While it would be “up to Congress” whether to conduct a Chinese-style crypto raid in the United States, crypto industry players keep coming up with their own proposals.
The chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, has ruled out the possibility of a Chinese-style crypto raid in America. He was responding to questions at a Congressional hearing in which a Republican lawmaker asked if “a China-like ban was on the table in the United States.”
The SEC chief responded that the government is focused on”ensuring that the industry addresses the investor- and consumer protection rules” as well as “anti-money laundering regulations and tax laws.”
While acknowledging that any China-like move to marginalize crypto in favor of a clear run for a digital dollar”would be left to Congress,” he urged exchanges to register with the SEC. He repeated his earlier claims that “most” crypto tokens were securities as defined by the SEC. He also took another swipe at stablecoins, again claiming that they are “like poker chips in a casino” and “can present”.] Broad systemic risks.” This is what the SEC chief did on this matter at the end of last month.
Gensler spoke of “decentralized platforms” and claimed that even these had “a centralized protocol”. He added that decentralized exchanges “don’t take custody in the same way” as a more conventional crypto exchange “I think these are the places where we can get the maximum amount of public policy.”
Crypto-specialist lawyer Grant Gulovsen was not surprised by the attention the community has paid to Gensler – and the concern some have expressed about his stance on all crypto issues.
However, some companies seem reluctant to wait for lawmakers and regulators to come up with their own thoughts on crypto regulation – and would prefer to capture the nettle by offering their own thoughts on the subject.
Venture capital powerhouse player Andreessen Horowitz (a16z) posted the thoughts of three of his AH Capital Management employees on his website in response to a request from the Senate Banking Committee.
The authors proposed four essential courses of action regarding decentralized finance (DeFi), decentralized autonomous organizations (DAOs), oversight, and tax issues. These are as follows:
- Consumer Protection and inclusion. Policy makers should “establish a coherent strategy to promote consumer protection” by creating a “disclosure-based oversight system under the Consumer Financial Protection Act”.”
- DAOs. These “still lack uniform legal recognition for basic organizational functions such as the filing and payment of taxes”, as well as banking and legal protocols. Using existing tax reporting tools, regulators could “create a lightweight framework for the off-chain legal status of DAOs” and “harmonise” the regulatory approach for DAOs.
- Harmonisation. Regulatory “fragmentation and overlap” is a stumbling block. Instead, regulators should seek to iron this out, while industry should respond by “establishing an industry self-regulatory organization” – with a technical regulator also established.
- Tax reporting. While “centralized” entities can be taxed under current law, this does not apply to certain “actors” without “ability to comply” (presumably, node operators and miners – those at risk of infrastructure bill). Instead, the authors propose to create “reasonable tax rules for digital assets.”
The authors wrote that they went public with their proposals as they “also want to share our proposals with the broader community in the hope that this can help catalyze a conversation about the future of digital asset legislation and regulation.”
In the meantime, some lawmakers want to make sure that government bureaucracy does not stifle innovation in the United States. Congressman Patrick McHenry has launched a bill that, if passed, would prevent the SEC from disrupting tokens and their developers for a three-year period.
He submitted his proposal through the House Financial Services Committee. If adopted, the measure would make an amendment to the much-maligned Securities Act of 1933 and create a “safe haven” for developers to work in before their projects are subject to regulatory scrutiny.