The U.S. Securities and Exchange Commission (SEC) hasn’t yet shared its plans for crypto regulation, and it’s causing concern.
“We’re hoping for more clarity around digital assets,” Emily Portney, CFO for Bank of New (BNY) York Mellon Corp told Reuters on Tuesday. “Frankly, it’s a bit confusing about who actually regulates digital assets and especially crypto … and of course exactly what you can or cannot do,” Portney said.
Meanwhile, crypto companies in the U.S. remain at the crossroads of regulation.
CFOs, for the most part, have been leery of Bitcoin on the balance sheet. For example, Robinhood Markets CFO Jason Warnick said last week at an event hosted by The Wall Street Journal that “there aren’t compelling reasons strategically for our business to put any meaningful amount of our corporate cash into cryptocurrencies.”
But during a time when crypto jobs listings on LinkedIn increased 395% in the U.S. between 2020 and 2021, finance chiefs like Portney are understanding the need to navigate this terrain.
Despite its wild ride, Bitcoin has staying power, says Marc P. Bernegger, co-founder of the crypto hedge fund AltAlpha Digital. “Similar to the COVID crash back in March 2019, Bitcoin seems to correlate heavily with short term bad news of the broader market right now,” Bernegger says.
“Mid-to-long-term, I see Bitcoin as a new inflation hedge based on its limited and fixed supply. Every stimulus is endorsing this element by devaluating fiat currencies like the U.S. dollar.” And Goldman Sachs predicted Bitcoin could hit $100,000 if it continues to take market share from gold.
Some experts thought the SEC would provide more crypto guidance by now. At a Fortune event in 2021, Robert J. Jackson, Jr., the Pierrepont Family Professor of Law at New York University and a former SEC commissioner, predicted action before the year ended.
“I think you can expect to see some developments in the crypto space” related to investor protections, Jackson said.
When asked on CNBC’s “Squawk Box” on Jan. 10 his view on whether Ethereum is a security or not, SEC Chair Gary Gensler only noted that potential crypto regulation is within the securities laws. “If they call themselves a token, they are still possibly a security,” he said.
One can decide whether or not they’ll invest, but “there needs to be some basic disclosures against lies and fraud.” Last month, Gensler announced Corey Frayer was hired as a senior advisor on SEC policymaking related to the oversight of crypto assets.
Although clear guidance is forthcoming, under Gensler the SEC continues with crypto-related enforcement actions, according to a report released today by Cornerstone Research.
In 2021, the agency brought 14 litigation actions in U.S. federal courts against digital asset market participants and six administrative proceedings, the report found. And of the 20 total enforcement actions, about 70% were related to initial coin offerings.
“Given the SEC’s continued focus on this space, in 2022 we may see further scrutiny of certain market participants such as DeFi platforms,” Abe Chernin, a Cornerstone Research vice president, said in a statement.
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