Cryptocurrencies are a new asset that could give you a high return on your money, but they are also risky. But they are not as well-regulated as stocks and bonds, which are more traditional investments. In the U.S., no federal agency oversees bitcoin and other cryptocurrencies.
Bitcoin is a commodity, so the Commodity Futures Trading Commission is in charge of it (CFTC). For tax purposes, the IRS treats it like property, and the SEC is in order of bitcoin futures exchange-traded funds (SEC).
Jeffrey Sprecher thinks that Senator Elizabeth Warren’s plan for regulating cryptocurrency through the SEC and making centralized cryptocurrency companies follow new rules would be suitable for cryptocurrency.
Jeffrey Sprecher, CEO of Intercontinental Exchange Inc. (ICE), and Elizabeth Warren, a senator from Massachusetts, both think that most cryptocurrencies will eventually be treated as securities in the United States.
The recent failure of FTX, which wiped out billions of dollars from the market, left customer funds in limbo, and hurt crypto’s reputation with regulators and government officials, has led to a renewed focus on regulating cryptocurrencies as securities.
Sprecher’s company, ICE, is in charge of running the New York Stock Exchange. On December 6, he confidently spoke about financial services at a Goldman Sachs Group Inc. conference. He also said cryptocurrency assets “will be regulated and handled like securities.”
Alex Sarabia, who works in Warren’s office, heard from Semafor that the senator is interested in the SEC. Even though the bill’s details have not been made public, it is known that the senator is looking to the SEC.
Bitcoin is the only asset that everyone agrees is a commodity that isn’t controlled by any one person or group. But regulators have been talking for a long time and are still talking about whether crypto assets should be considered commodities or securities.
People have also talked about using ether as a currency, but this idea hasn’t gotten as much support. The head of the Commodity Futures Trading Commission (CFTC), Rustin Behnam, recently changed his mind about whether ETH is a commodity. He did this while giving a speech at a private event about cryptography at Princeton University. Now, he thinks Bitcoin should be added. You can visit this URL to invest in bitcoins using a cryptocurrency trading platform.
What might happen if rules are put in place for the market?
Scholars have found that the basic ideas behind cryptocurrencies, such as anonymity and decentralization, as well as the lack of centralized regulatory authority that comes with them, are fundamentally incompatible with the concept of centralized regulation.
Some experts on public policy think that cryptocurrencies could help stop crimes like money laundering and other types of fraud. Because of this and many other things, they should be kept in check.
Short-term rules might make people act in a way that lowers the price of trading bitcoin. For example, the Chinese government’s decision to ban cryptocurrency transactions after September 2021 made cryptocurrency marketplaces less valuable.
On the other hand, rules could help stabilize the market and reduce some of the risks that cryptocurrency investors face if followed correctly over time.
How likely will rules be made for Bitcoin and other cryptocurrencies?
Investors buy a cryptocurrency for the first time during an initial coin offering (ICO). This method is similar to an initial public offering (IPO), the first time a company sells stock on the stock market (ICO). Gary Gensler is currently in charge of the Securities and Exchange Commission (SEC).
He agrees with his predecessor, Jay Clayton, that initial coin offerings (ICOs) are unregistered offers of securities that are covered by securities laws. The Securities and Exchange Commission (SEC) has started a few lawsuits against initial coin offerings (ICOs), which it thinks are unregistered offers of securities.
The President’s Working Group on Financial Markets put out a report on stablecoins in October 2021. According to the research, Congress needs to pass more laws that tell regulators how to do their jobs.
It also shows that more and more people are using stablecoins to pay for things, which can be risky. The three most significant risks found are a break in the payment system, a run on the stablecoin, and a concentration of economic power.
The Group also suggested making more laws to make certain dangers less likely to happen. Only banks insured by the FDIC would be able to make stablecoins if this idea is accepted. If many people wanted the stablecoin, this would help keep investors’ money safe.
Stablecoin issuers and wallet providers can’t do as much business as they would like. This would make economic power less concentrated and spread out. In the past, regulators looked down on the close ties between stablecoin issuers like Tether and cryptocurrency exchanges like Bitfinex, and they punished both for misleading investors.
