A revolution that needs to be managed together – The time has come for international cooperation in the regulation of the digital asset market. The US Treasury Department intends to create an international information exchange system on digital asset trading. Similarly, the Financial Action Task Force (FATF) wants states to cooperate in applying anti-money laundering (AML) rules to all decentralised finance (DeFi). It was in this spirit of international cooperation that Gary Gensler, Chairman of the Securities and Exchange Commission (SEC), spoke to the European Parliament.
SEC keeps an eye on exchanges and lending platforms
On 1 September Gary Gensler, Chairman of the US Securities and Exchange Commission, appeared before the European Parliament. During the video conference, the man exchanged with the Parliament’s Economic and Monetary Affairs Committee on various financial topics, including the regulation of crypto-assets.
“I think the transformation we are going through right now could be just as big as the internet in the 1990s […] This $2.1 trillion asset class is truly global. It has no borders or boundaries. It operates 24 hours a day, seven days a week. “
Gensler highlighted the financial technologies that are breaking down borders and bringing the European and American markets closer together. This is most certainly the reason behind this transatlantic contact. In his speech, Gensler stuck to the rhetoric he has been developing for several weeks. The head of the financial watchdog presents himself as technology agnostic, while being a fervent defender of a complete framework for emerging technologies.
The 2 types of entities that are currently being actively studied by the SEC are exchanges and lending platforms. According to Gensler, DeFi platforms “provide direct access to millions of investors” without the presence of a mediator between the public and the protocol. This would put the public at significant risk. Indeed, Gensler points out that DeFi is “rife with fraud, scams and abuse.”
Stablecoins to be framed internationally
The SEC chairman also highlighted concerns about stablecoins. Stablecoins, like USDT or USDC, have indeed become one of the foundations of the crypto ecosystem. Currently, over 75% of volu
The only way totrade digital assets
is through digital assets. And according to the SEC chairman, this is problematic:
“You’ve already heard about Facebook’s Diem. But there is a stablecoin market worth $116 billion. These tokens have been around for 7-8 years and are embedded in exchange platforms. I think stablecoins make it easier for those who are trying to circumvent an entire swath of public policy related to our banking system.”
On the topic of stablecoins, Gensler’s words echo those of Treasury Secretary Janet Yellen. The globalization of financial markets requires greater coordination between states. Indeed, the Treasury Secretary has devoted part of the first half of 2021 to diplomatic advocacy promoting international financial regulation. In particular, it was Yellen who spearheaded theinitiative for a universal corporate tax
Finally, the meeting also addressed environmental concerns. Green finance and environmental, social and governance (ESG) disclosures are among the priorities of the Economic Affairs Committee.
Gensler describedBitcoin’s carbon footprint
as a challenge to be solved. Nevertheless, he also presented the various energy-saving consensus mechanisms. According to the SEC leader, concerns about carbon emissions from cryptocurrencies will focus on Bitcoin, as new projects are not based on the proof-of-work mechanism.
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