{"id":158066,"date":"2021-01-19T20:21:35","date_gmt":"2021-01-19T17:21:35","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/how-to-regulate-exchanges-learn-crypto-from-bidens-sec-chair-pick-part-2-3\/"},"modified":"2021-01-19T20:21:35","modified_gmt":"2021-01-19T17:21:35","slug":"how-to-regulate-exchanges-learn-crypto-from-bidens-sec-chair-pick-part-2-3","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/how-to-regulate-exchanges-learn-crypto-from-bidens-sec-chair-pick-part-2-3\/","title":{"rendered":"# How to regulate exchanges: Learn crypto from Biden&#8217;s SEC chair pick, part 2\/3"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_84 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a2587677f4a4\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a2587677f4a4\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/how-to-regulate-exchanges-learn-crypto-from-bidens-sec-chair-pick-part-2-3\/#Crypto_exchanges_as_the_regulatory_chokepoint\" >Crypto exchanges as the regulatory chokepoint<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/how-to-regulate-exchanges-learn-crypto-from-bidens-sec-chair-pick-part-2-3\/#Unaudited_exchange_data\" >Unaudited exchange data<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/how-to-regulate-exchanges-learn-crypto-from-bidens-sec-chair-pick-part-2-3\/#Few_crypto_exchanges_had_KYC_protocols\" >Few crypto exchanges had KYC protocols<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/how-to-regulate-exchanges-learn-crypto-from-bidens-sec-chair-pick-part-2-3\/#Predicting_the_regulatory_crackdown\" >Predicting the regulatory crackdown<\/a><\/li><\/ul><\/nav><\/div>\n<p>&#8220;<strong># How to regulate exchanges: Learn crypto from Biden&#8217;s SEC chair pick, part 2\/3 <\/strong>&#8221;<br \/>\n<img decoding=\"async\" src=\"https:\/\/images.cointelegraph.com\/images\/840_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDEvNmE1NzY2NDEtYzRmNy00ZmIwLTkyMjAtMWQzMGVmYjZiZTFjLmpwZw==.jpg\" \/><\/p>\n<div class=\"post-content\" data-v-5a136f3a><em>This is the second in a three-part <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/watch-movies-tv-seriess\/\" data-internallinksmanager029f6b8e52c=\"8\" title=\"Watch Movies &amp; TV Series\" target=\"_blank\" rel=\"noopener\">series<\/a> based on Gary Gensler&#8217;s extensive prior public statements on crypto. Here is part 1. A link to part 3 will <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>ear here when it is published.\u00a0<\/em><\/p>\n<p>Gary Gensler will likely become chairman for the U.S. Securities and Exchange Commission, or SEC, in the coming days. A professor at the Massachusetts Institute of <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">Technology<\/a>, or MIT, Gensler knows his way around crypto and blockchain, evident in his leadership of a class on the subject at MIT\u2019s Sloan School of Management.\u00a0<\/p>\n<p>While teaching the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/ocw.mit.edu\/courses\/sloan-school-of-management\/15-s12-blockchain-and-money-fall-2018\/video-lectures\/\">Fall 2018 semester<\/a>, Gensler gave a wealth of insight into crypto regulation. In 2018, U.S. regulators were very much struggling to get a grip on the industry. But between the Bitcoin bull market that ended 2017 and the subsequent surge in initial coin offerings, it had become a top priority among the financial regulatory apparatus. Gensler&#8217;s thinking was reflective of many broad trends that has since come about.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Crypto_exchanges_as_the_regulatory_chokepoint\"><\/span>Crypto exchanges as the regulatory chokepoint<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>One element of crypto regulation that Gensler gives particular attention to is exchanges. A\u00a0<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.sipotra.it\/old\/wp-content\/uploads\/2018\/07\/The-Impact-of-Blockchain-Technology-on-Finance-A-Catalyst-for-Change.pdf\">paper<\/a> that Gensler authored with several of his colleagues at MIT around the time laid out their centrality to regulators: <\/p>\n<blockquote><p>\u201cAs most jurisdictions around the globe do not yet have specific regulatory regimes governing cryptocurrencies, ICOs or related tokens, exchanges are a critical gateway to protect against illicit money transmissions.\u201d<\/p><\/blockquote>\n<p>Which largely remains true. Also called \u201cfiat on- and off-ramps\u201d in legalese, crypto exchanges function as centralized inter<a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">media<\/a>ries in a largely decentralized economic system. The U.S. government thus pressures exchanges first in the crypto industry. Gensler&#8217;s team argued that the situation was untenable:<\/p>\n<blockquote><p>\u201cIn the US to date, the only regulatory safeguards have been through state-administered money transmission regulations. This approach \u2014 regulating exchanges\u2019 custodial duties in the same manner that Western Union and MoneyGram are regulated \u2014 has not been satisfactory.\u201d<\/p><\/blockquote>\n<p>\u00a0The paper elaborated on the need to treat exchanges like exchanges, which register nationally: &#8220;To better protect the investing public, though, crypto-exchanges will need to be regulated more akin to traditional exchanges.&#8221;\u00a0<\/p>\n<p><template data-name=\"subscription_form\" data-type=\"law_decoded\"><\/template><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Unaudited_exchange_data\"><\/span>Unaudited exchange data<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Gensler also noted a few interesting points on crypto exchanges and opaque information on trading volumes. He used an October 2018 report from CryptoCompare on the most prevalent digital asset trading platforms to discuss a lack of clarity around exchange numbers: <\/p>\n<blockquote><p>\u201cWe don&#8217;t know if these numbers are accurate. They are what CryptoCompare collects from 140 exchanges. But it doesn&#8217;t mean they are accurate. One way they can be inaccurate is an exchange can just outright lie. And if there&#8217;s no rule or law against it. They can do that.\u201d<\/p><\/blockquote>\n<p>Gensler also mentioned market manipulation efforts, such as wash trading, as different methods of dishonestly producing exchange output data and prices. Other areas lacking data included the number of users on any given exchange, as well as those users\u2019 activity levels. <\/p>\n<p>Wash trading remains a huge issue in many global exchanges, with crypto being especially vulnerable. The situation has improved remarkably since 2018, but data quality from many exchanges remains a contentious subject. Crypto exchanges based in the U.S. are subject to much more aggressive auditing measures than those outside the country. For a long time regulators didn&#8217;t really know who was accessing which exchanges, which led to the subsequent push for more user verification.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Few_crypto_exchanges_had_KYC_protocols\"><\/span>Few crypto exchanges had KYC protocols<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Crypto exchanges are typically the front line for know your customer, or KYC, and anti-money laundering, or AML, laws in the U.S. Platforms have to gather a certain amount of information on their customers to operate in the U.S., although the exact degree is always a subject of debate. <\/p>\n<p>As of 2018, 25% followed &#8220;partial\u201d KYC, and 28% observed \u201cabsolutely none.\u201d Gensler added: \u201cI hope none of those 28% are operating in the US. But they might be.\u201d<\/p>\n<p>The U.S. has cracked down on crypto companies in the years since 2018. A large number of crypto exchanges now block customers residing in America, with Binance\u2019s 2019 departure being a particularly notable example. U.S. regulatory bodies went after major derivatives exchange BitMEX in October 2020, in part citing a lack of KYC compliance that allowed U.S. persons to access investments that are not allowed in the country.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Predicting_the_regulatory_crackdown\"><\/span>Predicting the regulatory crackdown<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The crypto industry, as of 2018 at least, struggled with a lack of protective parameters, according to Gensler. He also predicted tougher incoming U.S. regulatory oversight in the U.S., which has indeed come true. <\/p>\n<p>\u201cThey&#8217;ll bring down a heavier footprint \u2014 bring down the hammer, if you wish \u2014 in 2019 or 2020,\u201d he posited. \u201cI don&#8217;t think that it\u2019s going to be in 2018.\u201d <\/p>\n<p>Various regulatory authorities have in fact come down on the crypto space since 2018, with the U.S. playing a particularly hawkish role worldwide. This is evident in examples like the SEC\u2019s numerous cases against ICOs, the CFTC\u2019s action against BitMEX or the DoJ\u2019s seizures of illicit stockpiles. But contrary to popular belief, regulation in crypto is often good <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">news<\/a> for the industry when it provides a clear path forward.\u00a0<\/p>\n<p>If Gensler takes the SEC chair, the crypto industry would gain someone who understands the crypto and blockchain space in depth. Producing rules and regulations based on an educated industry stance would likely help grow the space. <\/p>\n<\/div>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more News articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/general\/\" target=\"_blank\" rel=\"noopener\">General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/cointelegraph.com\/news\/how-to-regulate-exchanges-learn-crypto-from-biden-s-sec-chair-pick-part-2-3\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;# How to regulate exchanges: Learn crypto from Biden&#8217;s SEC chair pick, part 2\/3 &#8221; This is the second in a three-part series based on Gary Gensler&#8217;s extensive prior public statements on crypto. Here is part 1. A link to part 3 will appear here when it is published.\u00a0 Gary Gensler will likely become chairman&#8230;<\/p>\n","protected":false},"author":1,"featured_media":158067,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/images.cointelegraph.com\/images\/1200_aHR0cHM6Ly9zMy5jb2ludGVsZWdyYXBoLmNvbS91cGxvYWRzLzIwMjEtMDEvNmE1NzY2NDEtYzRmNy00ZmIwLTkyMjAtMWQzMGVmYjZiZTFjLmpwZw==.jpg","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[74859,74993,74860,74898,75269,55229,70934],"class_list":["post-158066","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-aml","tag-bitmex","tag-cryptocurrency-exchange","tag-sec","tag-us-government","tag-law","tag-regulation"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/158066","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=158066"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/158066\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/158067"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=158066"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=158066"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=158066"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}