September 22, 2021
SEC Chair Gary Gensler put forward a wide-ranging view of potential cryptocurrency regulation at a Senate hearing this week, saying that a type of digital asset called stablecoins may be considered a security. The comments come as the Treasury Department works with other federal agencies to draft a report by next month on potential regulations for stablecoins.
New rules could draw support from a top industry player, Facebook’s (FB) David Marcus, who has spearheaded the tech giant’s soon-to-launch digital wallet called Novi. Marcus also sits on the board of the Diem Association, a coalition of corporate and non-profit members that aim to bring out a stablecoin called Diem that will be exchanged over the new digital wallet from Facebook. In a new interview, taped prior to Gensler’s comments on Tuesday, Marcus told Yahoo Finance stablecoins “probably” will require additional regulation, which should focus on consumer protection as well as the prevention of illegal payments like money laundering.
During Gensler’s testimony before the Senate Banking Committee on Tuesday, Democratic Senator Elizabeth Warren (D-MA) asked about the possibility of crypto investors attempting to withdraw money during a market crash. Gensler said the SEC could not do much to help investors since crypto exchanges like Coinbase (COIN) had not registered with the SEC.
Marcus said investor risks found in stablecoins depend on the commodities that back a given cryptocurrency.
Facebook aims to release Novi along with Diem by the end of the year, Marcus told Axios earlier this month. Speaking to Yahoo Finance, Marcus said concerns over illicit payments with stablecoins offer an opportunity for regulators to improve the clarity of rules governing such transactions, even though stablecoins are currently used for everyday payments in rare circumstances.
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