- Gary Gensler of the SEC attended a Senate hearing on cryptocurrency and exchange regulation today.
- Senator Elizabeth Warren asked Gensler about the difficulty of withdrawing crypto during exchange outages.
- Senator Pat Toomey asked Gensler about the SEC’s unclear stance on whether stablecoins are considered securities.
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Gary Gensler, Chairman of the U.S. Securities and Exchange Commission, attended a Senate hearing today in which he discussed his agency’s stance on cryptocurrency and crypto exchanges.
Coinbase, DeFi Have Withdrawal Risks
During the hearing, Senator Elizabeth Warren asked Gensler about the difficulty of withdrawing cryptocurrency investments in the event of a market crash and cryptocurrency exchange outages.
“Is there anything I could do to get my money out?” Warren asked, using the crypto exchange Coinbase as an example of an exchange that went down during last week’s market crash and outage.
In response, Gensler said that government agencies could do little to help investors because Coinbase had not registered with the SEC. He also implied that it was Coinbase’s responsibility to do so due to the fact that it “may be trading dozens of securities.”
Warren went on to discuss the risks of Ethereum’s high transaction fees, which could make it difficult for users to redeem investments made on DeFi exchanges. “High, unpredictable fees can make crypto trading really dangerous for traders that aren’t rich,” she noted.
She suggested that it is up to agencies like the SEC to regulate those situations, a statement that Gensler concurred with.
Gensler Says Stablecoins May Be Securities
Earlier in the hearing, Senator Pat Toomey criticized the SEC’s unclear handling of stablecoins as securities. Toomey argued that dollar-pegged stablecoins do not seem to fit the definition of securities because they don’t carry the promise of returns.
Earlier this month, the SEC threatened to sue Coinbase over its lending plan, which promised 4% annual interest to users who deposited the USDC stablecoin with the exchange.
Though the conversation did not specifically reference Coinbase and its stablecoin plan, Toomey seemed to allude to that case in particular. “We certainly shouldn’t be taking enforcement action against someone without first providing that clarity,” Toomey said.
Gensler maintained that the laws around securities are currently very broad and that stablecoins “may well be securities.” He did not comment on the SEC’s negotiations with Coinbase.
Disclaimer: At the time of writing this author held less than $75 of Bitcoin, Ethereum, and altcoins.
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