TL;DR Breakdown
- SEC ready to partner other regulators for effective monitoring of the crypto space.
- Challenges faced by SEC in crypto regulation.
Gary Gensler, the newly appointed chairman of the Securities and Exchange Commission, has said the regulator is ready to cooperate with other regulators to perform oversight functions on crypto exchange firms effectively.
He said he is looking forward to this partnership to fill gaps in investor protection in crypto markets. The SEC chair said crypto investors need the type of protection investors get while trading on the New York Stock Exchange or Nasdaq.
Gensler spoke on the Wednesday hearing before the Financial Services and General Government subcommittee of the House of Representatives.
Challenges facing SEC regarding regulation
Gensler highlighted the growing crypto space as a significant challenge. He highlighted that beyond Bitcoin, over 80 other crypto exists with over a billion-dollar market cap. He said new data analytics would help them monitor well. However, their resources would be stretched.
He noted that the crypto market has to be regulated primarily owing to its highly volatile and speculative nature. Gensler said trade volumes in the market ranged between $130 billion and $330 billion a day but that the figures are unreliable because they’re unaudited and reflect trading on unregistered crypto exchanges.
The SEC chair also highlighted certain challenges the regulators face while performing oversight functions in the crypto space. He noted that the authority is under-resourced if they are compared to big active players in the crypto space.
Gensler said they spend just $325 million a year on technology, which is less than what big industry players spend in two weeks. He suggested that the SEC and Congress should cooperate to address crypto exchange regulation in a market volatility-related hearing of the House Financial Services Committee in early May.
However, Michael Hsu, the head of the Office of the Comptroller of the Currency, revealed that conversations are ongoing with the U.S Federal Reserve and the Federal Deposit Insurance Corporation to create an inter-agency policy sprint team to tackle crypto-related issues.
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