SEC’s Gensler tells Sen. Warren that the SEC wants extra crypto laws

U.S. Senator Elizabeth Warren (D-MA) questions Charles P. Rettig, Commissioner of the Internal Revenue Service, during the Senate Finance Committee hearing titled The IRS Fiscal Year 2022 Budget in the Dirksen Senate Office Building in Washington, DC, Aug. June 2021.

Tom Williams | Swimming pool | Reuters

Senator Elizabeth Warren is maintaining pressure to curb cryptocurrency exchanges.

On Wednesday, she released the letter that Securities and Exchange Commission chairman Gary Gensler wrote in response to her July 7 inquiry that it deals with the very opaque and volatile cryptocurrency market and determines whether Congress needs to act.

“At the moment, I believe that investors using these platforms are not adequately protected,” said Gensler in his response to the Massachusetts Democrat on Thursday.

The letter echoes Gensler’s comments before the Aspen Security Forum two days earlier, describing the asset class as “rich in fraud, fraud and abuse” and asking Congress for additional powers to prevent crypto transactions, products and platforms in between the regulatory cracks fall. “

The letter is published because the industry has failed to remove new tax reporting requirements for cryptocurrency brokers from the Senate’s Infrastructure Act. These new requirements could help pay for the $ 1 trillion bill envisaged by generating an estimated $ 28 billion in revenue for the government over 10 years.

In the letter, Gensler explains that the cryptocurrency market consists of platforms on which people can trade or lend tokens on central and decentralized platforms. And he warns that stablecoins – a type of cryptocurrency tied to an asset like the dollar – can be used on these platforms to bypass traditional banking rules, “anti-money laundering, tax compliance, sanctions and the like”.

“It doesn’t matter whether it’s a stock token, a securities backed value token, or any other virtual product that offers synthetic exposure to underlying securities. These products are subject to securities laws and must function within our securities regime. ”Gensler writes.

To date, the SEC has used its enforcement agency to establish itself as the premier cryptocurrency regulator, winning cases of fraud and unregistered securities offerings. He promised to continue using the law in force to prosecute fraud and ensure tokens are registered as securities, making them subject to disclosure requirements and regulatory oversight.

“I am glad that SEC Chairman Gensler has agreed and directed the SEC to use its full authority to address these risks and that he has also identified where additional regulators may need to be issued by Congress,” said Warren in a statement promised to work on legislation to close the regulatory loopholes.

Warren, a member of the Senate Banking Committee and chairman of its Economic Policy Subcommittee, has also urged the Financial Stability Board to use its powers to take the lead in developing a comprehensive and coordinated approach to regulating cryptocurrencies.

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