Key Policy Takeaways:
- The SEC chairman Gary Gensler will apear before the Senate on Tuesday, stating his stance on crypto exchanges.
- His testimony involves apparent intention to target altcoins that could be “securities”.
- The South Korean law enforcement agency FSC follows suit.
- The crackdown could lead the investors to lose $2.6 billion.
YEREVAN (CoinChapter.com) – The US Securities and Exchange Commission (SEC) could intend to close several crypto exchanges if they fail to register with the regulatory agency. The harsh stance echoed across the world in South Korea, where the Financial Services Commission (FSC) proposed conditions for the local exchanges to meet. However, over 60% of them could fail and close as a result.
What does the SEC want?
In hindsight, the core of the problem lies in the definition of ‘securities’, which is still quite unclear. According to the US investment laws, every digital asset that the SEC considers ‘securities’ rather than cryptocurrencies, must register with the Commission. As a result of loose definitions, every altcoin could end up under scrutiny.
Gary Gensler, the SEC’s chairman, will appear before the US Senate Committee on Banking, Housing, and Urban Affairs on Sep. 14, offering his views on crypto exchange regulations. His testimony is already available to the general public.
“Frankly, at this time, [crypto is] more like the Wild West or the old world of “buyer beware” that existed before the securities laws were enacted. This asset class is rife with fraud, scams, and abuse in certain applications.”commented the chairman
He also stated that many crypto exchanges offer exposure to hundreds of tokens, and “the probability is quite remote” that none of them are securities. Thus Mr. Gensler intends to investigate the sector as a whole to “protect the investors”.
While the chairman invited platforms to “come in and talk to us”, some have been burnt already. One example is Coinbase, one of the largest crypto exchanges that came forth to the SEC to discuss the upcoming Lending Program. As a result, the law enforcement agency prepares to file a lawsuit against them.
Attorney Jeremy Hogan, who is actively involved in the Sec vs Ripple Labs lawsuit, commented on Mr. Gensler’s upcoming testimony, without hiding his discontent. He asserted that the SEC is set out to get crypto exchanges without any clarification or warning.
The policy traveled to South Korea
FSC, the governmental financial agency in South Korea, mirroring its US counterpart, cracked down on crypto exchanges. Sources report, that 40 out of 60 platforms could fail to meet the requirements. Moreover, users that hold the local crypto “kimchi” coins, might not be able to trade them on other exchanges for fiat.
As a result, the move could cost over $2.6 billion. In detail, the “kimchi coins” are a cluster of 42 cryptos only for local investors. Should the exchanges close, the liquidity sustaining the exchange options will also disappear.
Cho Yeon-Haeng, the President of the FSC, commented on the situation.
Huge investor losses are expected with trading suspended and assets frozen at many small exchanges as customer protection will not likely be the priority of those exchanges facing an imminent closure.added the official.