Friday, September 17, 2021

The crypto space needs more regulation to grow and help investors

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U.S. Securities and Exchange Commission Chair Gary Gensler, who taught a course on blockchain – the technology underpinning bitcoin – at the Massachusetts Institute of Technology, has said he would like to see more regulation around cryptocurrency exchanges. Bitcoin, the largest cryptocurrency, surged to almost $65,000 in April, but has since lost around half of its value.

A representation of the virtual cryptocurrency Bitcoin is seen in this picture illustration taken June 14, 2021. REUTERS/Edgar Su/Illustration The SEC has taken the position that initial coin offerings are securities offerings and therefore subject to the agency’s offering rules, which require companies to file registration and disclosure documents.

He also said he would like to see the approval of a bitcoin exchange-traded fund, and for the SEC to create a “regulatory sandbox” – a testing ground for business models not protected by current regulation – where smaller companies could experiment with initial coin offerings, or fundraising. “They regulate by litigation,” Novogratz said of the SEC, “and that’s not a great way to regulate and so my pitch would be clarity, clarity, clarity.”

“We have a lot of non-bank banks in the space that if I was the head of the SEC, I would regulate,” he said. “They take in deposits, they have huge leverage, they have an asset-liability mismatch.” The more clarity around cryptocurrencies, the better, said Novogratz, a former hedge fund manager at Fortress Investment Group and Goldman Sachs partner.

Don’t miss out on the latest news and information. (Reporting by John McCrank; Editing by Andrea Ricci)

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