• Newly-appointed SEC chairman Gary Gensler clarified that the agency does not have jurisdiction to regulate Bitcoin.
  • The securities regulator is now urging Congress to make some key decisions around crypto regulation.
  • Consumer protection could decrease fraud and manipulation on crypto exchanges. 

The US Securities & Exchange Commission (SEC) told investors that they lack protections when they trade Bitcoin on cryptocurrency exchanges.

Only Congress can keep crypto investors safe

During a hearing held by the House Financial Services Committee, SEC chairman Gary Gensler highlighted that the trading of the leading cryptocurrency represents an oversight gap. 

Although the hearing was originally about the GameStop short squeeze, Rep. Patrick McHenry asked what the regulatory body would do to ensure that the cryptocurrency industry was “vibrant with legitimate money and under the rule of law.”

Despite the SEC’s authority to regulate digital assets that the agency considers securities, Bitcoin does not fall within that jurisdiction. Gensler said:

There’s a lot of authority that the SEC currently has in the securities space, and there are a number of cryptocurrencies that fall within that jurisdiction. But there are some areas, particularly Bitcoin trading on large exchanges, that the public is not currently really protected.

The securities regulator emphasizes that Bitcoin is a commodity under the US law and is not subject to the SEC’s oversight. While testifying during the hearing, Gensler stated that the $2 trillion crypto market could benefit from greater investor protection. 

The SEC chair added that Congress could consider bringing investor protection to crypto trading platforms. 

It's only Congress that can really address it. It would be good to consider whether to bring greater investor protection to the crypto exchanges.

Given that digital asset exchanges do not have a regulatory framework provided by the SEC or the Commodity Futures Trading Commission (CFTC), Gensler suggested that Congress could “instill greater confidence.” Without robust market regulatory oversight on crypto exchanges, he argued that there is no protection against fraud or manipulation.

Gensler’s nomination was voted for by Senate members last month, and the hearing on GameStop was his first appearance as SEC chair. The crypto community has been watching his term at the agency closely since Gensler has more extensive exposure and experience to digital assets than his predecessors. 

In March, Rep. McHenry introduced a new bill called the Eliminate Barriers to Innovation Act, which intends to address unresolved questions about how regulations affect the cryptocurrency market. The bill has been passed by the US House of Representatives and is awaiting the Senate and President for further approval. 


Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer. Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Recommended content


Recommended Content

Editors’ Picks

Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch

Bitcoin Weekly Forecast: BTC nosedives below $95,000 as spot ETFs record highest daily outflow since launch

Bitcoin price continues to edge down, trading below $95,000 on Friday after declining more than 9% this week. Bitcoin US spot ETFs recorded the highest single-day outflow on Thursday since their launch in January.

More Bitcoin News
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers

Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers

Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins. 

More Bitcoin News
Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction

Solana Price Forecast: SOL’s technical outlook and on-chain metrics hint at a double-digit correction

Solana (SOL) price trades in red below $194 on Friday after declining more than 13% this week. The recent downturn has led to $38 million in total liquidations, with over $33 million coming from long positions.

More Solana News
SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs

SEC approves Hashdex and Franklin Templeton's combined Bitcoin and Ethereum crypto index ETFs

The SEC approved Hashdex's proposal for a crypto index ETF. The ETF currently features Bitcoin and Ethereum, with possible additions in the future. The agency also approved Franklin Templeton's amendment to its Cboe BZX for a crypto index ETF.

More Cryptocurrencies News
Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin: 2025 outlook brightens on expectations of US pro-crypto policy

Bitcoin price has surged more than 140% in 2024, reaching the $100K milestone in early December. The rally was driven by the launch of Bitcoin Spot ETFs in January and the reduced supply following the fourth halving event in April.

Read full analysis
Best Forex Brokers with Low Spreads

Best Forex Brokers with Low Spreads

VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.

Read More

BTC

ETH

XRP