Senators clash over crypto regulation and fraud concerns
June 13, 2024 | Appropriations: Senate Committee, Standing Committees - House & Senate, Congressional Hearings Compilation
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During a recent government meeting, discussions centered on the pressing issues of insider trading regulations, the implications of a recent court ruling on private funds, and the evolving landscape of cryptocurrency regulation.
Senator Van Hollen highlighted the need to address gaps in the current regulatory framework for foreign private issuers, particularly regarding their trade reporting obligations. He emphasized the importance of timely electronic filings to enhance transparency and protect investors. Additionally, he pointed out a long-standing exemption for foreign private issuers under Regulation Fair Disclosure, which mandates that if material non-public information is shared with select parties, it must also be disclosed to the public. The senator urged staff to explore potential reforms to close these loopholes.
The conversation then shifted to the implications of the Fifth Circuit's ruling in the case of National Association of Private Funds Managers v. SEC. The ruling questioned the SEC's authority under Section 913 of the Dodd-Frank Act, which the court interpreted as primarily applicable to retail investors. This interpretation could limit the SEC's regulatory reach, prompting further examination of the ruling's impact on future rule-making processes.
Senator Durbin raised concerns about the SEC and CFTC's differing funding structures and their capacity to regulate the rapidly growing cryptocurrency market. He noted that while 88% of Americans are aware of cryptocurrencies, many lack confidence in their safety, with a significant portion reporting poor investment performance. Chairman Gensler reiterated the SEC's commitment to addressing fraud and abuse in the crypto space, emphasizing the need for a robust regulatory framework to protect investors.
Gensler also acknowledged the challenges faced by the CFTC in regulating non-security commodity tokens, asserting that the agency has successfully pursued numerous enforcement actions in the crypto market despite lacking direct jurisdiction. He underscored the importance of a disclosure-based regime, which he argued is essential for investor protection, particularly in a market where many tokens operate outside established regulatory frameworks.
The meeting concluded with a recognition of the complexities involved in regulating the cryptocurrency market, with both agencies expressing a commitment to enhancing oversight and protecting investors in this evolving landscape.
Senator Van Hollen highlighted the need to address gaps in the current regulatory framework for foreign private issuers, particularly regarding their trade reporting obligations. He emphasized the importance of timely electronic filings to enhance transparency and protect investors. Additionally, he pointed out a long-standing exemption for foreign private issuers under Regulation Fair Disclosure, which mandates that if material non-public information is shared with select parties, it must also be disclosed to the public. The senator urged staff to explore potential reforms to close these loopholes.
The conversation then shifted to the implications of the Fifth Circuit's ruling in the case of National Association of Private Funds Managers v. SEC. The ruling questioned the SEC's authority under Section 913 of the Dodd-Frank Act, which the court interpreted as primarily applicable to retail investors. This interpretation could limit the SEC's regulatory reach, prompting further examination of the ruling's impact on future rule-making processes.
Senator Durbin raised concerns about the SEC and CFTC's differing funding structures and their capacity to regulate the rapidly growing cryptocurrency market. He noted that while 88% of Americans are aware of cryptocurrencies, many lack confidence in their safety, with a significant portion reporting poor investment performance. Chairman Gensler reiterated the SEC's commitment to addressing fraud and abuse in the crypto space, emphasizing the need for a robust regulatory framework to protect investors.
Gensler also acknowledged the challenges faced by the CFTC in regulating non-security commodity tokens, asserting that the agency has successfully pursued numerous enforcement actions in the crypto market despite lacking direct jurisdiction. He underscored the importance of a disclosure-based regime, which he argued is essential for investor protection, particularly in a market where many tokens operate outside established regulatory frameworks.
The meeting concluded with a recognition of the complexities involved in regulating the cryptocurrency market, with both agencies expressing a commitment to enhancing oversight and protecting investors in this evolving landscape.
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