SEC Chairman Says the U.S. Won’t Ban Cryptocurrencies

SEC Chair Gary Gensler clarified his department’s stance on cryptocurrency by stating that the SEC will not ban cryptocurrency.

Photo by Kyle Glenn / Unsplash
Photo by Kyle Glenn / Unsplash

This week on the U.S. regulatory side, SEC Chair Gary Gensler has clarified his department’s stance on cryptocurrency by explicitly stating that the SEC will not be making any moves to ban cryptocurrency (as China recently did).  This comes on the heels of a number of regulatory actions by the SEC, such as their ongoing case with XRP, their recent public conflicts with Coinbase, charging the BitConnect founder with $2B of fraud, etc.

On Tuesday, in a House Committee on Financial Services hearing, Representative Ted Budd explicitly asked Gensler if the SEC supported China’s bans, and if the SEC would consider similar measures.  Gensler said his department was focused on: bringing cryptocurrency into the fold with financial regulations and consumer protection, enabling the Treasury Department to limit money laundering and enforce proper taxation, and limiting the risk that tools such as stablecoins posed to the financial markets.  He went on to say that his department doesn’t have the power to ban cryptocurrencies and that a move like that would have to come from Congress.  He stated that in many cases, crypto tokens pass the test to be considered “ investment contract, a note, or some other kind of security.”

This mirrors the stance of Federal Reserve Chairman Jerome Powell, who earlier this month in a similar Financial Services Committee hearing on cryptocurrency said that there was “no intention to ban them.”  Powell did explicitly call out stablecoins, saying they “are like money-market funds, they’re like bank deposits, but they’re to some extent outside the regulatory perimeter and it’s appropriate that they be regulated.”

TL;DR:  The chairmen of the U.S. SEC and Federal Reserve have explicitly stated that they don’t intend to ban crypto, but rather to pull the currencies into the regulatory fold, easing the fears of many investors.