The cryptocurrency market, at this point, has already been through a lot. These days have been quite difficult and worries about what will happen to cryptocurrencies in the future are growing. And as if that were not enough, we must add to this whole situation the most recent declarations of Gary Gensler, chairman of the SEC.
Gary Gensler recently gave an interview and the topic of cryptocurrencies was one of those discussed. On this occasion, the chairman of the SEC assured that crypto-currencies were highly speculative assets. Therefore, they should be regulated as if they were securities and not other asset classes.
Gary Gensler’s plan is to provide high security standards for investors. Remember that the United States is the country where we invest, exchange and mine the most crypto-currencies in the world. With this in mind, it is more than clear that a large number of American citizens are at risk if the cryptocurrency market is not as secure as it should be.
In the case of the United States, the issue of cryptocurrency regulation came a little late, especially when comparing this nation to others that are stronger in economics, technology, and law. And while it took longer than anyone thought, the regulation they craft might be the most appropriate, especially if they go the regulatory route to recognize cryptocurrencies and not ban them like the China has done this in the past.
Regulation will protect investors
In this scenario, at least for Gary Gensler, investors in the market are the most unprotected and suffer the most. This applies to investors at different levels, but especially to small investors. The SEC Chairman said that these cryptocurrency investors are not fairly and comprehensively covered.
For him, investors should not be considered as holders of cryptocurrencies, because it is money, a digital wallet and an exchange platform and it is quite similar to a standard transaction carried out through ordinary channels. As soon as investors have greater security, the market will be much more successful and citizens will be better protected.
Among Gary Gensler’s statements, he commented that cryptocurrencies are not as decentralized as we have been led to believe. For him, there are a large and very large number of trading and lending sites that deal in a large volume of cryptocurrencies that can cause the price to fluctuate and create variations in the status of these assets.
Furthermore, he pointed out that some cryptocurrency platforms consistently only go to investors for trading, but rarely for protection. If the platforms actually supported tokens, they wouldn’t have to worry about creating a market that ends up affecting investors.
Stable currencies will also be regulated
And as expected, the subject of Terra, which was the third largest stablecoin in the world and which suffered a total collapse that triggered losses in the millions for the cryptocurrency market, was brought up. Sometimes when people talk about cryptocurrencies they tend to think much more of decentralized currencies due to their high volatility, but Terra has shown that regulation may be necessary for this asset class as well.
In this regard, Gensler argued that stablecoins should also be regulated. He claims that stablecoins are typically used to buy and sell other cryptocurrencies, and are actually held by crypto exchanges. This means that individual investors are barred from direct trading and their hands are virtually tied.
In the past, Gensler has been a leading advocate for cryptocurrency regulation and has repeatedly attempted to give cryptocurrencies a truly proper place. One of the biggest challenges for regulators is defining a category for cryptocurrencies, and many still don’t know where to put them, but Gensler’s idea is to give them the quality of a valuable asset, which could be quite positive for cryptocurrencies.
If cryptocurrencies begin to be considered valuable assets under the law, country laws will also apply to the use of cryptocurrencies. Although it probably won’t stop the fluctuation of cryptocurrencies such as bitcoin, it could raise security standards to prevent some illegal activities, and by recognizing cryptocurrencies, it would lead to more investment and a much more profitable market in the medium and long term.
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