- US Securities & Exchange Commission chief Gary Gensler revealed his intentions to sue bad actors in the cryptocurrency industry.
- The SEC head highlighted investor protection as one of the primary reasons behind the move.
- This move comes after the Biden Administration requested that crypto exchanges report transactions over $10,000 to the Internal Revenue Service.
The United States Securities & Exchange Commission (SEC) Chairman Gary Gensler stated today that the regulator is ready to take on cases involving cryptocurrencies.
SEC ready to bring cases involving issues with crypto
At the 2021 Financial Industry Regulatory Authority (FINRA) Annual Conference, the SEC chair continued to highlight investor protection. Gensler said federal financial regulators should “be ready to bring cases” against bad actors in the cryptocurrency space. He added:
As we continue to stay abreast of those developments, the SEC and FINRA should be ready to bring cases involving issues such as crypto, cyber and fintech.
According to Gensler, the regulator aims to ensure that bad actors are not “playing with working families’ savings and that the rules are enforced aggressively and consistently.”
Gensler’s statement also comes after the Treasury’s request to report high-cost Bitcoin transactions over $10,000 to the Internal Revenue Service.
The SEC chair believes that regulations must be firmly set in place. In early May, he stated that the agency does not have jurisdiction to regulate cryptocurrencies and urged Congress to regulate digital asset exchanges.
While the agency has the authority to regulate digital currencies that the regulator considers securities, Bitcoin and many other cryptocurrencies do not fall within that jurisdiction. Currently, there is no market regulator around crypto exchanges, which means that there is barely any protection around fraud or manipulation, Gensler highlighted.
He further believes that this move would boost consumer confidence and protection.
SEC proposes rules to allow crypto projects time to decentralize
Not long ago, SEC Commissioner Hester Peirce proposed a safe harbor rule for cryptocurrency projects to provide more leeway for blockchain developers. This would enable startups to issue tokens three years before registering them as securities.
Her solution assumes that these coins would look like securities initially but may eventually evolve into something else. The proposal would allow the developers to list the tokens on exchanges to enable a boost in liquidity for the project to gradually decentralize control over the network.
Pierce clarified that an exit report must be submitted to the agency at the end of the three-year period. A third-party counsel will then review to determine whether the project is sufficiently decentralized or if it remains a security. If the project fails to prove decentralization, it must be registered with the regulator.