SEC Chairman's Speech Highlights: Cryptocurrency trading, lending, and DeFi platforms are legislative priorities.

The chairman of the SEC, Gary Gensler, recently delivered a speech on cryptocurrency and national security at the Aspen Security Forum. Gensler stated that cryptocurrency trading, lending, and DeFi platforms will be a focus of SEC regulation.

The Innovation of Satoshi Nakamoto is Real and a Catalyst for Financial Progress

Although Gensler's main focus in this speech was cryptocurrency regulation, he still acknowledged the innovation of Bitcoin.

Gensler mentioned that before joining the SEC, he taught courses on crypto finance, blockchain, and currency at MIT. He believes that while much of the crypto space is filled with hype and speculation, Satoshi Nakamoto's innovation is real and will continue to be a catalyst for financial and monetary innovation.

No Cryptocurrency Fully Meets the Functions of Money

Gensler pointed out that current fiat currencies like the US dollar, euro, and Chinese yuan are already digital public currencies, with increasing online transactions. They fulfill the three functions of money - "store of value," "unit of account," and "medium of exchange." However, currently, no cryptocurrency serves as a unit of account, and there are few examples of them being used as a medium of exchange. He believes that cryptocurrencies mainly function as digital, scarce speculative assets.

While personally interested in expanding financing channels and promoting economic growth, he emphasized the necessity of protecting investors, preventing illicit activities, and maintaining financial stability from a public policy perspective.

Stock Tokens, Some Stablecoins, Synthetic Assets Are All Securities

Gensler agreed with former SEC Chairman Jay Clayton's statement in 2018 that "all ICOs are securities." The SEC has enforced this stance in recent years. Gensler further specified that stock tokens, stablecoins partially backed by securities, and synthetic assets involving securities should all be subject to securities laws.

DeFi: Involves Securities Laws, Banking Laws, and Commodity Laws

Gensler also highlighted concerns about DeFi. He mentioned that DeFi platforms for trading and lending not only involve securities laws but also touch upon commodity and banking laws. Despite many platforms claiming to prohibit US investors, many still access these DeFi platforms through VPNs. The US public is engaging in trading and lending on these DeFi platforms without investor protections.

Gensler stated that as long as these platforms offer securities, they fall under the SEC's jurisdiction.

Stablecoins: Could Pose Risks to Public Policy and Require Regulatory Oversight

Gensler mentioned that while the public may only be familiar with Facebook's yet-to-launch Diem (formerly Libra), there is already a significant stablecoin market where most crypto transactions occur between stablecoins and other currencies.

He believes stablecoins could pose risks to anti-money laundering, tax compliance, economic sanctions, and other public policy objectives.

Furthermore, stablecoins could also be classified as securities and investment companies, subject to the Investment Company Act and other securities laws.

Reviewing Bitcoin ETFs with Investor Protection in Mind

Gensler also mentioned the ongoing debate surrounding "Bitcoin ETFs," emphasizing that any investment tools based on crypto assets will be reviewed with investor protection in mind.

Commitment to Regulatory Protection for Custodianship

Gensler stressed that custodianship protection is crucial in preventing theft of investor assets, and the SEC will seek maximum regulatory protection for custodianship.

Legislative Focus: Trading, Lending, DeFi

Gensler indicated that legislative focus should center on cryptocurrency trading, lending, and DeFi platforms. Regulatory bodies will work to establish rules.

In his speech, Gensler stated:

"Operating at the edge is not sustainable. I want to remind those who promote cryptocurrency innovation that, looking back at history, financial innovation does not thrive outside the framework of public policy."