With cryptos like Bitcoin deemed not securities, they fall out of the SEC’s jurisdiction, and the agency has no legal authority to regulate the crypto space while continuing to postpone the decision on Bitcoin ETFs.
The US Securities and Exchange Commission (SEC) has released its regulatory agenda for 2021, but Bitcoin is not part of it.
Its focus is rather on short-selling, a topic that gained momentum after the retail mania with meme stocks GameStop and AMC Theaters.
The SEC’s agenda shows the regulator will focus on climate risks, market structure modernization, and transparency around stock buybacks, short sale disclosure, securities-based swaps ownership, and the stock loan market.
Investment fund rules, enhancing shareholder democracy, special purpose acquisition companies, and mandated electronic filings are other things on the agenda. SEC Chair Gary Gensler said,
“To meet our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation, the SEC has a lot of regulatory work ahead of us.”
“I look forward to collaborating with my fellow commissioners and the dedicated staff to propose and finalize rules that will strengthen our markets, increase transparency, and safeguard investors.”
The fact that the SEC deems cryptocurrencies like Bitcoin, not securities, fall out of the SEC’s jurisdiction. Basically, SEC has no legal authority to regulate the crypto space, and there’s no clarity around which regulatory body non-security crypto assets fall under.
“Laws need to change before the SEC has authority over bitcoin,” said Jeff Dorman, CIO at Arca.
Meanwhile, the approval of a Bitcoin exchange-traded fund (ETF) is in no way close to being done despite several companies having filed for both Bitcoin and Ether ETFs.
SEC has already postponed its decision on VanEck’s Bitcoin ETF, and on Monday, it delayed another one, Kryptoin ETF, by 45 days to July 27.
SEC’s new chairman Gary Gensler, who has taught blockchain classes at MIT and was expected to be crypto-friendly, recently said that cryptocurrencies are a “highly volatile asset class” and that the public would benefit from more investor protection on the crypto exchanges.
“There’s a lot of authority that the SEC currently has in the securities space, and there are a number of cryptocurrencies that fall within that jurisdiction but there are some areas, particularly bitcoin-trading on large exchanges, that the public is not currently really protected.”