The Securities and Exchange Commission (SEC) sees crypto in a very negative light. However, according to many analysts, the financial agency stands alone in its views, and everything it considers differs heavily from the thoughts and ideas of the rest of the world.
The SEC is Very Crypto Strict
One of the big things the SEC believes is crypto exchanges are like securities exchanges, and they must be treated and regulated as such. Gary Gensler – the man in charge of the SEC – also thinks crypto markets share many similarities with traditional stocks and bonds. Thus, exchanges should be broken down into different businesses. He stated last June:
Most crypto tokens are subject to the securities laws. Most crypto intermediaries [need] to comply with securities laws as well. In other parts of our securities markets, the exchange, broker-dealer, and clearing functions are separate. Separation of these core functions helps mitigate the conflicts that can arise with the commingling of such services. These crypto entities know the rules.
Right now, one of the big things occurring in the crypto arena is the lawsuit between the SEC and Coinbase, one of the largest digital currency exchanges in the world. Brian Armstrong – the top executive of Coinbase – said the U.S. has become too hostile for crypto, and he’s considering moving his entire organization to international territory. He stated:
Anything is on the table, including relocating or whatever is necessary. I think the U.S. has the potential to be an important market for crypto, but right now, we are not seeing that regulatory clarity that we need.
Many analysts think it would be best if crypto exchanges worked to separate their custody services from their commission and fee-collecting services. Thus, there would be no need to break things down the way the SEC is suggesting. Ben Zhou – CEO of crypto exchange By Bit – said:
Our license to operate an exchange in the United Arab Emirates is based on our license application, in which you can select digital asset facility service and custody together. Once you get the license, it will be approved based on what you applied for. Whereas in Hong Kong, due to the local regulations, you will need different entities to apply for activities of custody and digital asset facilities… Whether companies like Coinbase and Gemini can survive the SEC requirements is a matter for further observation.
Other Regions Are Calmer
The U.S., however, appears to be the only country imposing such strict rules against crypto. In other regions, like Turkey, the regulations are quite lax, and digital assets fall under, for example, the Capital Markets Board (SPK). CEO of Meta Time Yusuf Sevim said:
This rule does not ban cryptocurrency exchanges or investments, but [it] limit[s] the intermediation of transfer transactions via payment and intermediary institutions.