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SEC Chair Gary Gensler Proposes “Rule Book” To Regulate Cryptocurrencies

 


SEC Chairman Gary Gensler has reportedly proposed a one-rule-book approach to regulating all crypto-asset trading. Gary Gensler is in direct communication with fellow regulators at the Commodities Futures Trading Commission (CFTC).


The decision to align with other financial regulators like the CFTC will help address security concerns and maintain transparency by plugging the potential loopholes in the digital asset sector. He has explained that stocks and commodities are intertwined when it comes to the current trading situation. Gensler further adds:


I'm talking about a set of rules on the exchange that protects all trades regardless of trade pair - [be it] security token vs security token, security token vs commodity token, commodity token vs commodity token.


This move follows a series of legislative activities initiated over the past few months to provide a clear and thorough legal framework for digital assets.


"Memorandum of Understanding" to share information about crypto

Gary Gensler has mentioned a “memorandum of understanding” specifically aimed at requiring the SEC to share information about crypto assets with the CFTC. The US Securities and Exchange Commission (SEC) has decided to make the supervision of cryptocurrencies, which are considered securities, mandatory.


Meanwhile, the CFTC will be responsible for regulating the commodities and derivatives markets. The rationale behind the proposal to introduce a single rulebook is to protect investors' interests from widespread market manipulation and other fraudulent practices.


He further explained that the SEC is responsible for reporting the information to the CFTC when a token has been listed on an SEC-regulated platform.


This move will, in a sense, push crypto companies to register with the SEC. Once they register, businesses are entitled to the protection offered to customers in the event of a crypto crash.


Gensler also stated:


By getting that framework for market integrity, a framework for an exchange will really help the public. If this industry is going to have a way forward, it needs to build more confidence in these markets.


The exact roles of the SEC and CFTC in regulating the crypto industry

With cryptocurrency fraudulent practices on the rise, Gensler has warned the public about deals that are “too good to be true.” He has also urged the public to beware of crypto exchanges, which often trade against customers.


Following the Terra Stable Coin (UST) massacre , investors are advised to be cautious with such tokens as there is always a possibility that these tokens could fail. CFTC and SEC have worked together to regulate various areas of the crypto industry and their rules have been set out in the bill.


Cynthia Lummis of the Wyoming Senate introduced the bill that would establish the role of the two agencies in regulating cryptocurrencies. To date, the CFTC has handled derivatives, while the SEC has handled securities involving digital assets.


New York Senator Kirsten Gillibrand has also backed the bill, introducing a crypto regulatory framework intended to give the CFTC more powers. Senator Lummis believes the SEC chairman has no intention of banning cryptocurrencies in the United States.

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