Improving investor education and improving regulation are two key steps that experts want to implement in the digital currency market, as governments broadly aim to protect consumers trading within riskier asset classes. .
The Senate Banking Commission heard testimony Thursday from Melanie Center Rubin, chairman of the North American Securities Managers Association, and Jerry Walsh, senior vice president of investor education at the Financial Industry Regulatory Agency.
Senators such as Senator Pat Toomey (R-Pen) and Sherrod Brown (D-Ohaio) emphasized the role of the Securities and Exchange Commission in managing the new regulations surrounding cryptocurrencies, but experts Witnesses also advocated improved investor and consumer education.
“Fostering enduring trust and informed use of regulated capital markets to ensure that our markets continue to grow to the benefit of both businesses and investors. We need to do a better job for the sake of it,” Rubin said. “Fostering lasting trust is a way to improve how we prevent and detect investor harm and ensure that those charged with enforcing the law have the tools they need to do their job. It starts with improving the
Walsh agreed that fraudulent information about cryptocurrency products is still widespread on social media platforms, and frauds offering cryptocurrency payment options are particularly popular. She added that the lack of transparency in the digital currency market and the corresponding regulation contributed to the rampant fraud surrounding the industry.
“Bringing crypto and digital assets into the realm of regulation can have very extraordinary value to consumers and the market itself, as far as disclosure is concerned, and our system is complete, fair and misleading. It’s based on uninvited disclosure, which brings value to our crypto market, “she said.
Rubin said penalties such as fines could also help protect and deter investors from cryptocurrency fraud.
“These penalties need to fall into a range high enough to deter bad behavior,” she said.
In response to questions from Toomey, Lubin ultimately opined that cryptocurrency lending products that lend digital currencies at high interest rates fit the security description and are therefore subject to SEC regulatory jurisdiction.
“This is a new category of assets that doesn’t look like all previous categories of assets, and Congress has failed to provide that clarity, and at least it provides clarity of their interpretation. Not doing it is a failure of the SEC, “said Toomey.
Early in the hearing, Rubin said: It’s what happens in certain situations. And most securities lawyers will look at it and say, “Yes, it’s an investment contract and it needs to be regulated.”
Until stronger federal regulation arrives, Rubin advocates for stronger laws that can protect consumers, such as a bill sponsored by Senator Chris Van Hollen aimed at protecting seniors from financial fraud. did.
“We never have enough resources to do what we do. Scammers in the industry always have far more resources than regulators,” she said.
Walsh also said investor education could be even more useful as a “complementary tool” in the absence of regulatory financial disclosure.
“we [FIRA] Along with the Securities and Exchange Commission, many other federal agencies, and a network of national nonprofits, we are working with state securities regulators to learn as much as possible about the tactics criminals are using to separate people from their money. I will inform you widely. , including in the area of digital assets,” she testified.