Top government crypto-critic, Senator Elizabeth Warren, earlier this month, received a response to her letter about the activities of cryptocurrency in the US and it’s filled with lots of things she loved to hear.
The Massachusetts senior democrat senator, last month, first wrote to Gary Gensler, US Security and Exchange Commission (SEC) boss, over what she now describes as the ‘wild west of our financial system’ about the world of cryptocurrencies. Here are what Gary said in his response and why you should be concerned:
More laws coming crypto way
And that’s the summary. Gensler let Warren know through his letter that the existing laws do little to help the SEC comb through every nook of the financial blockchain sector in America, thus tossing back the responsibility to Warren to forge more laws into pitchforks for the SEC to wield overall expanse of the cryptoverse. The newly targeted sectors are DeFi’s, DEx, and stable coins which are believed to be a growing thorn in the operations of traditional fiat institutions.
Gensler reaffirmed the validity of the Howey test in determining which crypto counts as an asset and which are securities or investment contracts. Under this law, all Initial Coin Offerings (ICOs) and cryptocurrencies that employ the token burning mechanism will have to report and be subjected to the laws of the SEC. This may well have been stated in connection to now-inherited legal fisticuffs with Ripple Labs, the company behind top-tier cryptocurrency, XRP.
Gary Gensler’s appointment by Biden earlier this year, sent bright sparks through the embattled cryptocurrency sector, with everyone welcoming the idea of an insider as the head. Barely five months on the job, and tens of interviews after and it’s clear, Gensler may not be a big fan of what he teaches at Massachusetts Institute of Technology — Warren’s senatorial jurisdiction.
Stablecoins, DeFi’s Will Definitely Be Under The Radar
Gensler is going after DeFi for what he believes is the possibility of many of these tokens to brilliantly evade SEC’s regulatory radar, and after stablecoins, because they are tied to fiat cash and appear as a patent channel for evading tax compliance and enforcing sanctions. This amounts to over 10% of the current $2 trillion crypto market.
There’s been the clamor for more rules with Gensler urging Warren, and Warren beckoning on treasury secretary, Janet Yellen to act quickly but none seems to factor in the very key players of the industry to which these rules would apply.
In this present, this may seem not to matter as long as the white house has waved its signet of approval, but many entrepreneurs and innovators like Square, CEO, Jack Dorsey, and Ripple co-founder, Brad Garlinghouse know how it is possible to threaten the innovations to extinction and kick the US off the leader board in the financial technology sector.