The number of cryptocurrency investors is increasing, and so is the amount of money they invest. However, worldwide, crypto investors face a large loss. The United States Congress, on the other hand, will not stand idly by as U.S. crypto investors are ruined completely. Senator Elizabeth Warren (D-MA) urges the Securities & Exchange Commission (SEC) to act. With that said, Congress and Wall Street continue to wait for further action from the SEC amid the cryptocurrency crash.
Congress and Wall Street call on Gensler to take action on crypto
Not only are members of Congress perplexed, but so are analysts as to why SEC Chairman Gary Gensler has not been more aggressive. While the Bitcoin market works to establish a bottom in the current bear market, the Fear and Greed Index consistently hovers around extreme fear levels. For 72 days, the index has been stuck in exceptionally negative sentiment.
On May 5, the cryptocurrency market materialized a dramatic shift in sentiment. Bitcoin lost support at $38,000 and broke below the rising support line then. It fell to a low of $25,228 on May 12, during which it formed a consolidation above the next support line.
However, it too lost its grip, sending the price tumbling in June. The present low of $17,567 was established on June 18. Following the upward support line’s resurgence since then, another consolidation is taking place.
Congress needs to act, but the SEC has a responsibility to use its authorities to put guardrails in place and crack down on crypto actors that break the rules. I’ve been ringing the alarm bell on crypto, and the need for stronger rules to protect consumers and financial stability […] Too many crypto firms have been able to scam customers and leave ordinary investors holding the bag while insiders make off with their money.
Senator Elizabeth Warren
According to Cowen analyst Jaret Seiburg, Gensler has a short window in which to act.” Otherwise, Congress and Wall Street anticipate that progressives and conservatives will hold him responsible for why ordinary investors have lost money in cryptocurrency.
According to one crypto sector lobbyist, more enforcement action is anticipated by Congress, with a significant number of the crypto industry fearing to talk to the SEC out of fear of being proactive.
Cryptocurrency investors are finding out that there is no government safety net to catch them if their funds vanish on a failed cryptocurrency platform. The big banks, Congress, and Washington, D.C. lawmakers, want to change the narrative surrounding this topic.
Customers of both Celsius Network and Voyager, two cryptocurrency lenders, have lost money and access to their accounts after both firms folded following the crypto market collapse. Following a loan default by crypto hedge fund Three Arrows Capital last month, Voyager filed for bankruptcy protection this month. On Friday, Celsius also applied for bankruptcy protection.
Is SEC to blame for the blurry laws in the crypto industry?
As the SEC’s director of corporate finance since 2021, Gensler has been largely unwilling to propose rules regulating cryptocurrency or utilizing existing securities legislation. And this is after Gensler repeatedly declared that virtually all cryptocurrency tokens are securities, and platforms that trade those assets are exchanges.
It’s time for action. The situation is reaching a crisis point, and Congress will no longer tolerate it. Gensler, on the other hand, points to enforcement proceedings taken by the SEC against cryptocurrency companies that broke securities regulations, such as BlockFi.
Meanwhile, in Europe, regulators have agreed on a new system to protect investors and consumers from fraud. According to Lawyers and Congress commentators, the SEC is waiting for the outcome of Ripple’s lawsuit, which will set a precedent for crypto regulation while also providing the agency more ammunition to regulate cryptocurrencies as securities.
On the other hand, other analysts believe that the SEC has gone after and curbed crypto abuses under Gensler in a reasonable manner. Analysts are unsure how much control the SEC has over them when it comes to shutting down fraudulent crypto lending platforms.
The CFTC and SEC Chair Gensler are said to be collaborating on developing a single regulatory framework for cryptocurrencies. According to reports, the rulebook will enable uniform enforcement of whether a cryptocurrency is deemed a security or a commodity.
Congress members from both the House and the Senate have submitted numerous proposals. In late spring, Senators Cynthia Lummis (R, WY) and Kirstin Gillibrand (D, NY) unveiled a broad bill. However, given more pressing legislative challenges, this legislation will most likely need to be broken down into pieces to pass.
The recent turmoil in crypto is a clear example of why Congress and financial regulators need to come together to create a robust regulatory framework for digital assets that protects consumers and provides clarity for investors.
Senator Bob Menendez (D-NJ)
Given how long it typically takes for Congress to pass legislation, the SEC could act faster than Congress with its agency power to safeguard investors utilizing its authority over crypto rules.
Congress is not ready to act on crypto legislation. Absent a crisis, it is hard to see Congress passing a crypto regulation bill until spring 2024. And it is likely to take more time rather than less.
Jaret Seiburg
