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[Bithumb Easyconomy] SEC chairman Gary Gensler discloses digital assets regulation

Bitcoin’s stagnation after its continued rally could indicate heightening concerns that authorities in different countries may tighten regulations. Not to mention in India and Turkey, in South Korea and the US as well, the authorities’ threatening remarks targeting the digital assets market have caused the investment sentiment to shrink. Especially, the negative remarks from the US secretary of the treasury Janet Yellen and chair of the Federal Reserve Jerom Powell were enough to intimidate investors all around the world, understandable considering the US’ status as the center of world economy and finance and the barometer of global regulations.

Meanwhile, the Securies and Exchanges Commission (SEC), which regulates and overseas the overall finance market including digital assets as well as stocks, bonds, and funds, had not disclosed its public stance on the matter, with the seat of chairman left vacant for a while. But when Gary Gensler, the newly appointed chairman of SEC, made remarks on the issue during a hearing of the US House Committee on Financial Services on the 6th (local time) and also during his CNBC interview on the 7th, SEC’s stance was conveyed.

First of all, Gensler defined Bitcoin as a “digital, scarce store of value, but highly volatile.” That was him as the head of the SEC, which oversees all assets categorized as security including stocks and bonds, making it official that the agency should be the one regulating this cryptocurrency.

Secondly, Gensler made it clear that digital assets investors must be protected as stock investors are.

He said that, although the SEC has regulatory authority over the digital assets market as over the stock market, there are limitations in the agency’s oversight, adding that this is why the investors need to be more strongly protected.

Thirdly, he emphasized the need for additional legislation on digital assets to protect investors.

Gensler said that the SEC does not have a regulatory framework on these exchanges although the agency must oversee digital assets and that only Congress has the right to create one.

Recently, the US House of Representatives passed the “Eliminate Barriers to Innovation Act of 2021.” The primary goal of this act is to clearly stipulate the regulatory authority of the SEC and Commodity Futures Trading Commission (CFTC) over different digital assets and which digital assets to recognize as products. For this, the SEC and CFTC plan to establish a working group consisting of industry and academic experts. Gensler’s remarks could be construed as a willingness to speed up the process.

As well known, Chairman Gensler was an executive at Wall Street’s representative investment bank Goldman Sachs and also the chairman of CFTC in the Obama administration. Until recently, he has lectured on blockchain and digital assets at the Massachusetts Institute of Technology (MIT). He has a high understanding of digital assets and is known to have a favorable mind toward investors in the financial market.

He was the one who carried the ball with the regulation of derivatives while serving as the chairman of CFTC, when it was criticized as a main facilitator of the global financial crisis in 2008. However, he is now remembered as the very person who successfully vitalized the derivatives market through healthy and market-friendly application of the regulations.

Now, digital assets such as Bitcoin and Ethereum are recognized as valid investable assets actively adopted by institutional investors. Once the exchanges have proper regulations and investor protection devices in place, the investor base will be expanded. We may be living at the dawn of the “era of digital assets.”

*This research and analysis material was produced for the purpose of providing reference information based on reliable data and information. However, its accuracy or quality is not guaranteed.

*This material reflects personal opinions which may not be consistent with the company’s official views.

*This material has never been provided to third parties such as institutional investors.

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