The United States Securities and Exchange Commission (SEC) has stated that the crypto industry must adhere to “time-tested” security laws. This was confirmed by Gary Gensler, the new SEC Chairman, in a tweet on December 22, 2022.
Until crypto platforms comply with time-tested securities laws, risks to investors will persist. It remains a priority of the SEC to use all of our available tools to bring the industry into compliance. https://t.co/m8oh0gTvc3
— Gary Gensler (@GaryGensler) December 22, 2022
In his tweet, Gensler said that crypto in general must adhere to the same security laws that have been in place for decades. These laws, which include the Securities Act of 1933 and the Securities Exchange Act of 1934, were put in place to protect investors and ensure transparency in every financial market.
The SEC has been closely monitoring the crypto industry in recent years, as it has grown in popularity and size. In 2018, the Strategic Hub for Innovation and Financial Technology (FinHub) was established by the SEC, and it is responsible for engaging with the crypto industry to provide guidance on the regulation of digital assets.
Initial coin offering (ICO) is one of the main concerns that the SEC has been concentrating on. In an initial coin offering, investors purchase tokens that signify ownership in a new cryptocurrency firm. The SEC has cautioned that numerous ICOs might be viewed as securities, in which case they would need to be registered with the organization and adhere to federal securities rules.
The SEC has also expressed worry about the lack of transparency and investor safety in the cryptocurrency sector. Recently, many cryptocurrency exchanges have come under fire for lacking good governance and failing to safeguard investors from fraud and other wrongdoings.
According to Gensler’s tweet, the SEC is determined to ensure that the cryptocurrency market complies with the same rules as other financial markets and is adopting a harder posture toward the sector. Many investors and industry stakeholders applaud this move since it adds another level of protection and promotes industry trust.
The crypto sector is still very new, thus there are a lot of uncertainties and difficulties that need to be resolved. For instance, it is still unclear how to categorize certain kinds of digital assets, such as stablecoins and security tokens. There is also the question of cross-border regulation, as many cryptocurrency businesses operate internationally and might be governed by various laws in several nations.
In conclusion, it’s clear that the crypto industry must continue to evolve and mature to meet the expectations of regulators and investors. By adhering to “time-tested” security laws and working closely with regulators, the industry can continue to grow and thrive in the years ahead.
