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According to SEC Chairman Gary Gensler, further regulations for the cryptocurrency market are on the way.
The Securities and Exchange Commission (SEC) is expected to announce new guidelines for the regulation and registration of security-based swaps, including cryptocurrencies, in the near future.
In a speech to the American Bar Association Derivative and Futures Law Committee SEC Chairman Gary Gensler laid out the changes coming to security-based swaps over the next year. The measures are intended to improve market transparency and reduce risk. New counterparty safeguards, capital and margin requirements, internal risk management, supervision and chief compliance officers, trade acknowledgement and confirmation, and recordkeeping and reporting processes are among the new regulations that will take effect in November. Swap data repositories, for example, will be required to make data on individual transactions public starting in February.
“Thus, I’ve asked staff to consider ways we can continue to increase transparency and reduce risk through our unused authorities, particularly with regard to security-based SEFs and position reporting.”
Toward the end of his speech Gensler said trade reporting rules will apply to cryptocurrencies if the products are security-based swaps:
“Make no mistake: It doesn’t matter whether it’s a stock token, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities. These platforms — whether in the decentralized or centralized finance space — are implicated by the securities laws and must work within our securities regime.”
Under the Securities Act of 1933, every offer or sale to retail participants must be registered. According to Gensler, the SEC would employ all of its tools to ensure that investors are protected in these circumstances.
In recent months, cryptocurrency regulations have been a hot topic among a number of US government bodies. On July 14, the Chairman of the Federal Reserve took a strong line on the need for stricter rules for stablecoins, then went on to testify before Congress last week about the idea of a US digital currency. A bill has also been presented in Congress to provide digital assets a clearer legal definition and alleviate concerns about future restrictions affecting blockchain-based currencies. The President’s Working Group on Financial Markets said in a meeting on Monday that they intend to release proposals for stablecoin laws in the coming months.