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Crypto Firms May Not Have to Comply with Some Laws – SEC Chair

In a recent discussion with Yahoo Finance, SEC Chairman Gary Gensler revealed that the US watchdog might overlook crypto firms when enforcing certain regulatory measures. Rather than subject crypto outfits to present securities laws, Gensler believes flexibility in new rules could help most crypto firms adhere to the constitution.

New Market Slump Makes Regulation a Necessity

Given the ongoing crypto decline and the collapse of various companies in the space, regulation is more important than ever. Some of the platforms in question include crypto hedge fund Three Arrows Capital and loan company Celsius Network. Both firms have fallen apart recently and are currently embroiled in a legal drama of some kind.

Due to the situation, authorities globally and in the US particularly are hyper-focused on regulating the crypto market. The Security and Exchange Commission (SEC) is contemplating allowing the crypto industry to operate independently of some securities laws. Of course, this move will aid the regulators significantly as they deal with issues that may arise at the moment. 

However, it will also be instrumental in the regulators’ ultimate goal to properly police the expanding space. Gensler stated that the watchdog was aware of crypto platforms that do not operate according to its directives. However, the chairman declined to reveal any of the rogue companies in question.

SEC Open to Thoughts From Industry Players

Furthermore, Gensler reiterated that the SEC was not hostile towards the crypto industry at large. Rather, the regulators are open to interacting with crypto firms, weighing what works best for either entity.

According to the SEC Chair, by working together, the SEC and key crypto players could uncover a way forward. He claimed to have reached out to the industry, to exchanges and loan companies:

Come in, talk to us.”

It’s important to note that the regulators are not getting rid of laws aiming at the crypto space. Gensler revealed that the relevant bodies were mulling over a more “personalized” regulatory structure. The industry could stand to gain from a new set of streamlined rules, meant only for it. 

Increasing Investor Protection

According to the SEC chair, despite a significant number of defaulting organizations, the wider crypto industry has expressed a willingness to comply. However, the choice may be taken out of their hands at some point. As regulation evolves into a pressing need, authorities may have to tighten their grip or initiate a crackdown.

There is also the need to increase investor protection. As stated earlier, policymakers are in a rush to establish laws centered around digital assets. Gensler expressed concern for traders amidst the crisis warning them to be careful of platforms offering astronomical returns on investments.

If it is good to be true, maybe it is…A lot of risk may as well be embedded in there,” Gensler said.

No doubt the SEC Chair also had some of the recently collapsed platforms in mind, such as Terra. He likewise touched on stablecoins, during the interview comparing them to poker chips. Gensler claimed they functioned similarly, as settlement tokens on trading and lending firms.

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He stated that late events like Terra’s only emphasize the need for regulation that would help shield users from fraud and manipulation. Finally, Gensler noted that SEC was in talks with the CFTC and others to come up with possible legal solutions.

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