Gary Gensler, former chairperson and one of the top financial regulators in the Obama administration talked about the fast evolving realm of cryptocurrencies during his recent at the Massachusetts Institute of Technology on April 23, 2018.
Ethics And Governance
“I don’t think it’s any longer a question of ‘if,’ but it’s a question of ‘when.’’ ICOs and other tokens really must comply with the securities, commodities, and derivatives laws here in the United States and around the globe.”
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Gensler, who previously served as a partner at Goldman Sachs, seems to be of the view that well-crafted regulatory policy is essential to protect investors and institutions, even though it will probably sting a lot. He recently joined MIT where he will teach and write about blockchain and how it could transform the financial world.
While doing so, Gensler will also shed light on how a significant proportion of ongoing projects in the world of digital currencies are likely to experience difficulties convincing regulators about their merit and long-term prospect.
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He also emphasized that while he is sure that was necessary for “plumbing the financial sector,” it also has to be compliant with laws to gather public confidence. Gensler also pointed out that the rules governing financial services do not have to remain the same.
“But laws that have been established over many, many decades that customers and investors and to make sure that markets work efficiently, that’s called market integrity. So, customer protection, investor protection, market integrity. And to really work I believe blockchain technology needs to come within that public policy framework.”
According to Gensler, the best way to go about said objective is to strike a balance among those protections while simultaneously promoting innovation.
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Regulation of Ethereum and Ripple
Gensler also spoke at length about the viability of regulating top cryptocurrencies like and . It is worth noting here that the ex-CFTC chairman has been vocal about potential violation of securities laws by coins like ETH and XRP, the second and third most commonly used cryptocurrencies.
“The SEC and regulators around the globe need to look at all these tokens,” he said, adding that such a move could bring clarity to the market.
For the uninitiated, a security is an interchangeable and negotiable financial instrument bearing some sort of economic value. The categorization of crypto coins as securities started gaining ground shortly after the United States Securities and Exchanges Commission () subpoenaed more than 80 firms for information regarding their ICOs in an effort to regulate them.
Gensler says that both Ether and Ripple, for instance, need to be looked into as the discussion on crypto regulation intensifies. He believes that both these coins have certain traits that make them more like securities instead of currencies.
Interestingly, if coins like Ether and Ripple are officially recognized as securities, the move could make it illegal for US citizens to trade them on the vast majority of the exchanges they are currently traded. This essentially means that the step will also make it more cumbersome for investors to buy and sell those coins despite their prices.
Predicting a rather exciting year for the worldwide crypto market, Gensler said that more than 1,000 ICOs and 100+ exchanges would have to get their act together and fall in line with the US securities laws.
Gensler also said “ are not securities,” he explained that they didn’t launch an ICO and it is more like a unique license to own a kitty.
Will bitcoin Be Counted as a Security?
According to many industry observers including Gensler himself, is unlikely to be clubbed into the securities category. This distinction comes from the fact that bitcoin, currently the most popular digital currency in the world, did not stem from an initial coin offering or any comparable centralized platform.
Moreover, the technological aspects of the bitcoin network are overseen by a decentralized group of developers. Other digital currencies that fall under a similar definition include and .
Gensler has repeatedly stated that Ethereum could potentially face some problems with regulators because the first Ether tokens went to sale (2014) even before the had the network functional.
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witnessed its first massive virtual currency related theft back in December and January when equipment worth millions of dollars were stolen from data centers in the country. Now, all hopes of recovering the stolen machines may be shattered as the number one suspect has vanished from police custody.
No Evidence
In what was termed the “Big bitcoin Heist,” the prime suspect, has escaped from detention and flown to Sweden from his low-security prison. He’s now in Sweden.
According to a local news source, , the alleged master criminal has said that he was legally free to travel at the time he left police custody.
Sindri Thor Stefansson, the ultimate suspect in the most significant Iceland crypto-related heist that saw over 600 mining computers and other hardware estimated at nearly $2 million, seamlessly left the prison on April 17, 2018, and boarded the same flight as Iceland’s prime minister to Sweden on April 19.
As per reports from Frettabladid, the suspect had sent in a letter to them claiming he was held without any substantial evidence for several months before he escaped from the guardhouse.
Expired Order of Arrest
According to Stefansson, the order of detention against him expired on April 16, 2018, and all efforts by the police force toward the renewal of his custody by ten days proved futile as a judge adjourned the decision for 24 hours. The alleged criminal now used this 24-hour window to escape from custody. As a result, Stefansson claims he was a free man by law at the time he left prison.
In his words (roughly translated), “I simply refuse to be in prison of my own will, especially when the police threaten to arrest me without explanation,” he wrote, adding that:
“I have been in custody for two and a half months unsuccessfully, without evidence, but only because of police suspicion. That’s what I’m angry about. I have not been published a single testimony, and I was threatened and threatened with longer isolation while isolation took place.”
At current, no one can say for sure where Stefansson is, however, the police suspect that he is in .
$60,000 Bounty
While the stolen ‘money making machines’ is still missing without a trace whatsoever, the big crypto whales who own the equipment have placed a $60,000 reward for anyone who has valuable hints that could lead to recovering the mining machines.
The suspect has told local news sources that he’s willing to return home, provided the police can give him some concrete assurance that he won’t be re-arrested. “I’m working on negotiating with the police in Iceland that I can get home without being arrested abroad,” he wrote.
The value of blockchain-based cryptocurrencies is continuously on the rise. Therefore the need for adequate security of data centers cannot be overemphasized. Also, there’s need to impose more for crimes related to digital currencies, to deter bad actors from orchestrating unlawful acts.
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