Gary Gensler is back, and guess what? Crypto users might have to brace tighter for what he has in store for them in 2022.
Speaking to CNBC earlier last week, the SEC chairman vowed to deal with the crypto “wild west”, stepping up 2021’s regulation efforts through the enactment of laws and scrutiny structures.
Gensler who has repeatedly called on the regulation of digital assets, once again made known his stand, claiming that some cryptocurrencies qualify to be classified under security laws by their very nature.
“If you are raising money from the public and the public is an anticipation of profit based upon that promoter, sponsor, that group’s efforts that’s within the security laws,” he said.
According to him, cryptocurrencies are within the security laws because Congress painted them with a broad brush.
The SEC chair insists that while digital assets are fairly a new investment frontier, basic laws on investor protection still apply. That said, crypto token issuers must be willing to issue disclosure and protection guidelines to the public, which shall all go under the regulator’s hand for approval.
And true to Gensler’s concerns, the crypto industry has since inception been painted in a bad light for facilitating criminal activity.
Recently, New York-based Chainalysis reported that crypto investors lost over $4 Billion to rug pulls in 2021, with crypto-based crimes rising by 79% to hit $14 Billion in losses.
According to the firm, rug pulls accounted for 82% of all crimes bedeviling the nascent industry. A rug pull refers to a scheme where fraudsters elope with investor money after luring them to invest in their token(s). Cyber-attacks, money laundering, and online scams are accounted for in the remaining fraction.
With cryptocurrency adoption rates skyrocketing for the last two years, regulators around the world are increasingly getting involved in examining legal lacunas created by digital assets. Lawmakers around the globe are already considering, with some having tabled comprehensive cryptocurrency bills in a bid to regulate the sector.
Crypto exchange chiefs including Binance’s CZ, Cardano’s Hoskinson, and voices such as SEC’s Hester Pierce have also expressed their support for regulation, promising to work closely with regulators in protecting players in the sector. However, they are calling on lawmakers to pass laws that will not hinder innovation or cripple the budding industry.
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