Gensler Reveals His Plans for Crypto Regulation

We all knew this day was coming. SEC Chief Gary Gensler, in a speech he gave at the Aspen Security Forum this week, has now confirmed it. The US government will be regulating crypto trading. What that looks like is still being debated, but the first shots have been fired.

For all those who thought we had a friend in high places, think again. Despite being a former MIT professor who taught cryptocurrency and blockchain, Gensler is not actually a fan. He’s “neutral to the technology, but he wants “more government control” over cryptocurrencies.

His argument for the new regulation? The government wants to “protect investors” from fraud. I’m on board with that if that’s as far as it goes, but the crypto industry is a $1.6 trillion market. This could be more about Uncle Sam getting a bigger piece of the pie.

The SEC Wants to Change Crypto Classifications

Gary Gensler recently asked Congress to pass a new law that would give the SEC legal authority to monitor crypto exchanges. Bitcoin has been accepted as a currency and classified as a commodity. That might change soon if Gensler has his way.

With DeFi and stablecoins, the SEC is looking to reclassify them as securities, giving the commission broader oversight over them. This move would also require cryptocurrency issuers to have greater price transparency and more extensive reporting.

The push for a more stringent structure is in its early stages, but we know that Gensler is looking at seven key areas: initial coin offerings, trading venues, lending platforms, DeFi, stablecoins, custody, and exchange-traded funds. We’ll keep you posted as we know more.

Bitcoin Cash versus the US Dollar

Sometimes it’s the words that are not spoken that mean the most. Bitcoin Cash (BCH), the often-ignored little brother of BTC, is up 56.06% YTD in 2021. In the United States, BCH measures its value against the US dollar. For the past twelve months, it’s up 81.94%.

Meanwhile, the US dollar has been in steady decline for the past year, despite having a strong first quarter. This is unlikely to change with the aggressive economic policy approach of the Biden administration. Inflation will decrease the value of the dollar even further.

The Fed has already begun to research the possibilities of the US government issuing its own digital currency. China has made their own moves in this direction, sparking fears that they’re looking to replace the dollar as the world’s global reserve currency.

Is all of this behind the SEC push for stricter crypto regulation? One can only assume that it’s been part of the discussion. As the world moves closer to purely digital mediums of exchange, the race for the top spot is heating up. Control over the market is critical.

Purpose Bitcoin ETF is Turning a Corner

Most of the “crypto ETFs” you’ll see advertised online are just tech funds disguised as crypto because they contain blockchain companies. Very few fund managers have had the intestinal fortitude to put together a “pure” crypto ETF. It’s important to understand the difference.

The demand is there, but recent volatility in the space has made investors leery. This past month, the Purpose Bitcoin ETF (BTCC) may have awakened some of the naysayers. It’s up 14.61% in the past thirty days and continues to rise.

I’m still betting on Ethereum 2.0 (ETH) to win the crypto race, but BTCC seems to be a decent place to park some cash and wait for the next big Bitcoin uptrend, which will come. As for Blockchain stocks, I wrote about those a few weeks ago. Read that article here.

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About the Author

Gensler Reveals His Plans for Crypto Regulation

Kevin Flynn

A former financial professional and founder of AdvisorScale Financial Writing, Kevin lives in Leominster, Massachusetts with his wife Evelyn, two cats, and nine wonderful grandchildren.