The Bitcoin and other cryptocurrency ballooned during the pandemic. It saw wild fluctuations and huge market volatility. Despite all the ups and downs the main crypto asset Bitcoin has stayed at more than $20,000 per coin more often than not and climbed much higher as well. There were times when the cryptocurrency saw a 300 percent increase in value.
Recently, hackers have demanded payment in Bitcoin as they added ransomware to infrastructure, travel and food companies crippling their online operations for days on end. The hackers asked for payment in Bitcoin as this unregulated asset is easily transferable, yet difficult to trace. However, things are going to change as Gary Gensler, the head of the Securities and Exchange Commission (SEC) has taken a closer look at regulating cryptocurrencies.
Gary Gensler is an experienced regulator who has worked both on Capitol Hill as well as in the Treasury Department. His prior job was as a professor at the MIT Sloan School of Management. He focused on
- blockchain technology
- digital currencies
- financial technology
- public policy.
NPR reported that Gensler said that investors weren’t getting enough information to “judge the risk” and “understand the risk” of cryptocurrencies. He has asked Congress
- to give regulators authority so that they could write new rules.
- to give them sufficient resources as money and manpower to regulate cryptocurrencies.
Gensler has not mentioned specific details about how the SEC will look at the crypto asset. However, he has mentioned the need for “guardrails.” These can be considered actions that will help protect individual investors who invest in these assets.
Professional investors say that they welcome a formal framework of rules but also say that these rules should not be too stringent. Earlier, the Senate had put in a provision to strengthen tax enforcement on cryptocurrencies, but lobbyists are at work trying to overturn these rules.
Cryptocurrencies were developed as assets that would be untethered by governments. However, it is a lofty concept to think that it is possible to continue to let these assets be unrestricted or unregulated, considering the fact that they are extremely prone to be used illegally. Earlier untethered assets like gambling and marijuana, also went down illegal paths yet both of them are getting regulations from states across the nation, decreasing if not eliminating their illegal and unregulated aspects.
