Bitcoin, Coinbase, Binance and more are all fighting for their lives as the United States Securities and Exchange Commission does everything in its power to eradicate the current cryptocurrency system in the United States and replace it with one it deems more "fair" to the American public.
From start in 2009, cryptocurrency, or digital currency, has taken the world by storm and caught the attention of millions of investors who are interested in digitizing their assets. At first glance, this seems convenient to many, but as SEC Chairman Gary Gensler has argued, the system is so deeply flawed that the American public doesn't even realize the risks it is taking.
This argument is not to say that the burden of responsibility falls heavily on the public and their ability to understand and invest their money wisely, but rather to point out how powerless investors are for crypto exchanges. Without changes to the very infrastructure of these platforms, there is no hope for a successful and fair world of digital currency.
SEC Concerns: Investor Protection and Crypto Exchanges
The SEC has found issues with the way these large cryptocurrency corporations manage investor money. as Gensler argument In his interview with CNBC, the investing public is subject to many security laws that regulate how their money is invested and managed in conventional markets like the New York Stock Exchange.
Digital currency corporations do not comply with these same regulations, where the central problem lies. There is no valid reason or argument for these corporations to be exempted from complying with such laws, other than the ease it gives crypto platforms when it comes to reinvesting money. This is seriously detrimental to the investing public and, in the SEC's view, must be stamped out. The SEC's mission is to hold these corporations to these values, but they run into trouble when it comes to executing these goals.
One of the main reasons for the strong push for these corporations to comply is the misuse of investor funds. Many of these digital currency databases commingle investor funds, creating a huge liability issue that would not be allowed in the conventional investing world.
The New York Stock Exchange would also not be allowed to run a hedge fund since, technically, it would be trading against the general public who have invested in the stock market. People's investments in the stock market would become inaccessible to them as a hedge fund is capitalizing on high-risk investments with high-yield gains beyond the funding capabilities of the general public.
At its core, this concept has no merit and lacks the logic of a successful investing world: it creates a system of giving but not taking. In the same vein, digital currency services should not be able to take all funds received from investors, pool them, and reinvest them in whatever way they see fit to "maximize profits," thereby creating greater risks than the initial individual investor was aware of. willing. Take Charge Take Charge. This strips investors of control over their own money and puts them in a position where their investments could generate substantial returns for someone else. There is an obvious discrepancy between what is "legal" in investing and trading, what these digital currency companies are getting themselves into, and what the public understands about what is actually going on with their currency investments.
Gary Gensler Leading the SEC Crypto Crackdown
Gensler acknowledges these discrepancies, which is why he has recently been much more aggressive in leading the SEC to resolve the issue. He argues that everything is digital now, so there is no need for more digital currency. All of the "mainstream" currency the world uses can be digitized through online payment options, ApplePay, and other similar features. Therefore, he does not see a real need for the existence of cryptocurrencies in general.
This thought process, combined with all of the aforementioned risks of cryptocurrencies, has led Gensler to his suddenly aggressive stance. He always believed that the SEC had discretion over cryptocurrency proceedings, but his inability to bring this to fruition has apparently led to an extreme and frustrating prospect.
On June 6, 2023, the The SEC sued Coinbase, the second largest crypto exchange by volume. The SEC claims that Coinbase made billions of dollars from unregistered exchanges and sales of crypto assets by removing and ignoring necessary protections of individual investor funds. However, it is not just Coinbase where there are problems. Binance has been actively advertising to the US public while simultaneously evading US law and SEC regulations. All over the world, these companies are doing everything they can to operate above security laws.
Today we are charging Coinbase, Inc. with operating its crypto-asset trading platform as an unregistered national exchange, broker, and clearing agency and with failing to register the offer and sale of its staking program as a crypto-asset service.https://t.co/XPG2gDkxtV pic.twitter.com/hCdVMw8B2v
โ US Securities and Exchange Commission (@SECGov) June 6, 2023
Looking beyond the negativity: the potential of crypto-innovation
There is no denying that the tone of the situation up to this point has been negative and possibly scary. However, it is crucial to remember that, at its core, cryptocurrency is about innovation. These problems exist because we live in an ever-growing and technologically advanced world, and cryptocurrency is one of those new innovations. The creation of cryptocurrencies and the ease with which they can be invested in and traded is a great technological achievement, but the lack of regulations combined with this newfound freedom has become a catalyst for an unmanageable investment world. At this point, the SEC is simply realizing that this innovation has festered beyond its authority, so there is a sudden desperation to try to bring cryptocurrency into its sphere of control.
As a result, the US seems to be stuck in a big game of โcatch me if you canโ, where the SEC can't seem to get cryptocurrency agencies to fully comply, and the agencies don't want to go into compliance. since they have been operating without it until now. These agencies have been very successful in marketing themselves as profit machines for small investors, which is what continues to attract people. Their actions and misuse of funds aren't as tangible or visible as they would be if the New York Stock Exchange behaved in the same way, but that doesn't mean they should be ignored.
The SEC understands the threat these corporations pose to the health of the US investment system if they continue to be unregulated. This is why the SEC is doing everything in its power to strip cryptocurrency agencies of their ability to manipulate investor funds in any way they see fit under zero regulations. The future of cryptocurrency in the US looks bleak if this stubborn battle between law and evasion continues, leaving the American public and the rest of the digital investment world to drown in the middle.
callie dunn brings extensive experience as a paralegal to The brick. As a youngster in our technologically advanced world, Callie is interested in the evolution of blockchain technology and cryptocurrency, and what her trajectory could mean for the future of the economy. She believes it is invaluable to understand the dynamic between investment ambiguity and hard and fast law.
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