SEC Chair Gensler published an article in WSJ yesterday claiming crypto needs more “protection”. Ironically, just a day before, one of his “protected” stock BBBY fell 44% in one day! What does protection actually mean?
2 min read
Yesterday Gensler published a crypto hit piece article in the Wall Street Journal, in his usual style claiming crypto suffers from lack of protection, and the SEC is the body to regulate crypto, and that they will regulate crypto on the same lines as capital markets and clamp down hard.
He makes a comparison with motor vehicle safety, claiming the government regulated seat belts long ago and they are still applicable today. Similarly, Gensler says the Securities Act passed in 1939 is still applicable today.
Yet, as he publishes this article, on the well regulated stock market under complete SEC oversight, a stock is crashing 44%..
The whole thing was pretty much a pump and dump. It hit almost $30 earlier in the week, now its $9.
Do those who bought this share at the peak feel protected? Gensler claims there is information asymmetry in crypto, similar information asymmetry exists in stocks too, it exists in all market. Does “Protected” means filling a bunch of expensive paperwork to keep the regulators happy? When he took charge of the SEC, he said a bunch of big statements that he would bring about changes to Payment for order Flow that companies like Robinhood exploit, and investigation of dark pools. Since then, he hasnt done anything.
In the Gensler article, he claims crypto companies are free to approach SEC for clarity on regulations and work something out. Lets see how this has worked out:
Coinbase CEO has already hit out once before, claiming the SEC is not interested in providing clarity on regulations. Infact the SEC apparently refused to even meet with Coinbase. To the crypto markets, it seems pretty obvious that the SEC is trying to regulate via legal action and not by progressive rule making taking into account the views of all parties involved. There is not even basic clarity on what constitutes a security token, and what is allowed. Meanwhile, SEC has rejected multiple Bitcoin spot ETFs, while allowing a much more complex future ETF that only helps the funds offering the ETF charge investors higher expense ratio and hidden costs due to rolling over futures, while not actually holding any bitcoin. SEC’s arguments to deny spot ETF’s make absolutely zero sense – to claim Bitcoin spot market suffers from market manipulation, while Bitcoin futures market has no manipulation is absurd. Both track one and the same instrument. The largest BTC futures market are outside SEC’s regulation (Binance, Bitfinex etc)
He ends the article with an ominous note:
In the meantime, the SEC will serve as the cop on the beat. As with seat belts in cars, we need to ensure that investor protections come standard in the crypto market.
One has to wonder if this article is the precursor to another regulatory action.
submitted by /u/Set1Less
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