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Prolific crypto market demands regulation, investor education, experts say

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Improving investor education and regulatory improvements are two key steps professionals want to implement in the digital currency market, as the government broadly aims to protect consumers who buy and sell within high-risk asset classes. ..

The Senate Banking Commission heard testimony Thursday from Melanie Center Rubin, chairman of the North American Securities Supervisors Association, and Geri Walsh, senior vice president of investor education for financial industry regulators.

Senators such as Senator Pat Toomey (R-Pen) and Sherrod Brown (D-Ohaio) emphasized the role of the Securities and Exchange Commission in managing the new regulations surrounding cryptocurrencies, but experts Witnesses also advocated improved investor and consumer education.

“To ensure that our market continues to grow for the benefit of businesses and investors, we are even better at promoting lasting trust and informed use of regulated capital markets. I need to work, “Rubin said. “Promoting lasting trust improves the way investors prevent and detect harm, and ensure that those in charge of law enforcement have the tools they need to do their jobs. It starts with that. “

Walsh agreed, noting that fraudulent information about cryptocurrency products is still widespread on social media platforms, and that frauds offering cryptocurrency payment options are particularly popular. She added that transparency in the digital currency market and the corresponding lack of regulation contributed to the rampant fraud surrounding the industry.

“Bringing crypto and digital assets into the territory of their regulation can bring very extraordinary value to consumers and the market itself, as far as you disclose. Our system is complete and It is based on fair and non-misleading disclosure, which adds value to our crypto market, “she said.

Fines, such as fines, could also help protect and thwart investors from cryptocurrency fraud, Rubin said.

“These penalties must be high enough to provide deterrence for bad behavior,” she said.

In response to a question from Toomey, Lubin finally stated that cryptocurrency lending products that lend digital currencies at high interest rates fit the securities description and therefore fall under the SEC’s legal jurisdiction.

“This is a new category of assets that doesn’t look like all previous categories of assets, and Congress has failed to provide that clarity, and at least it provides clarity of their interpretation. Not doing it is a failure of the SEC, “said Toomey.

Early in the hearing, Rubin said, “It is very important for people to be able to assess and judge whether something is safe. Therefore, our job is to take the law, take the facts, and case law. And to take and apply the statutory law, and most securities lawyers will look at it and say, “Yes, it is an investment contract and needs to be regulated.” “

Until federal regulation tightens, Rubin advocates strengthening consumer protection laws, including a bill sponsored by Senator Chris Van Hollen, aimed at protecting older people from financial fraud. did.

“There is never enough resources to avoid what we are doing. Industry scammers always have far more resources than regulators,” she said.

Walsh also said investor education could be even more useful as a “complementary tool” in the absence of regulatory financial information disclosure.

“we [FIRA] Work with the Securities and Exchange Commission, many other federal agencies, and a network of national nonprofits, as much as possible about the tactics criminals use to separate people from money, in collaboration with state securities regulators. I will inform you widely. , Including the field of digital assets, “she testified.