Regulating the crypto industry is the perfect example of “all bark, no bite” in the world, especially when it comes to the United States. For years, the SEC has said that they plan to tightly rein in cryptocurrencies, and those have stayed as plans. The US government has started to explore the space, and crypto has won the war. Unfortunately, it looks like the SEC might’ve accidentally caught the industry, which is putting people on alert.
The SEC rule, intended to help strengthen Treasury markets, aims to include more systems like exchanges and broker-dealers by expanding the definition of these terms. This would legally affect the De-Fi portion of the crypto industry, which is one of the fastest growing and useful parts of this whole wave. Although the proposal doesn’t mention crypto or DeFi, crypto firms like Coinbase are concerned that the verbiage would affect it as there are still humans behind the DeFi software and governance, which would qualify as a prospective seller. Even worse, SEC Chair Gary Gensler has shown no sympathy to the industry, saying that offering securities makes it a necessity that they fall under regulations. Crypto lobbying groups are working their hardest as they feel abiding with SEC rules would be impossible, and certain venture firms are also against the SEC’s plan, which could convince them to change parts of the rule. The most ironic part about this is that the rule is built for the Treasury, yet it is affecting the opposite side of the finance area, but cryptocurrency could continue to tumble if things are set, especially Ethereum due to its DeFi links.
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.