This is Karma, the SEC will regulate and overlook all crypto lending firms in the future. Undeniably, the Securities and Exchange Commission hates all that is crypto. A position clarified by the SEC chair Gary Gensler time and time again. On the other hand, crypto lending firms have been some of the most amateur and careless entities in the crypto industry. During the latest crash, some of the biggest lending platforms went underwater wiping out all their customer’s funds in the inevitable downfall. Crypto Hedge Fund 3AC, Celsius network and Voyager were the biggest platforms to disappoint. Obviously, with an absolutely disgusting performance, comes strict and harsh regulations. And this time around, all crypto lending firms will have to report to the SEC.
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Gary Gensler to the Rescue
U.S Securities and Exchange Commission (SEC) Chair Gary Gensler addressed the regulatory aspect of crypto lending firms in a recent interview with the CNBC.
According to Gensler, the digital asset lending platforms are currently operating in a way that concerns the SEC.
“Many of these firms like BlockFi that settle may well be investment companies taking hundreds of thousands or millions of customer bonds, pulling it together and then relending it.
It sounds a little like an investment company, or a bank you might say, and some of these are offering pretty high returns, 4%, 8% 10% returns and how are they doing that?
What stands behind those promises and so, we’re going to continue to try to work with the industry, get these firms properly registered under the securities laws and protect the public.”
Furthermore, Gensler went on to say that their sister company the CTFC will also have jurisdiction. The crypto lending firms will also have to work with Commodity Future Trading Commission.
“Any large institution works with the Securities and Exchange Commission, works with their sister agency, the Commodity Futures Trading Commission…
Our two market regulators have a lot of tools to protect the public. That’s what’s most important. We have time tested tools and laws about trading securities in the marketplace.
Many of these underlying tokens have the attributes of securities and so the only question is how to get them inside of this investor protection remit and then the public has more confidence.”
Regulating the Crypto Lending Firms
The digital assets lending platforms entered the scene with a plethora of sweet promises. Bringing banking services to the unbanked, rewards and returns. For the most part, they did actually deliver on their promises but as long as there was a bullish market. During the latest crash in June, they froze all withdrawals due to “extreme market conditions” and the investors lost a lot of money.
This performance raised a serious issue which was the lack of sufficient regulations. To begin with, lending platforms treated investor’s crypto as their own which is also a big problem with massive exchange platforms such as Coinbase. Remember, not your keys, not your crypto. On the other hand, the shady loans, insider trading and a massive lack of liquidity literally got out of hand with these lending platforms.
Karl Marx Vs. Satoshi
It might not sound cool, but crypto lending firms need lots of regulations. Their borderline criminal behavior in the past couple of years proves how trust is not enough to run a financial system.
Sadly, with all the regulations, the crypto industry is losing function. Despite all the marketing attempts, the global financial system does not suffer from slow transactions per second and not having NFTs. In fact, the world really does not need memes and memecoins and private money named after desserts. In essence, the biggest competitive advantage for cryptocurrencies is the lack of paralyzing regulations. A quality that is pretty much gone by now.
So, one must wonder, is crypto the new and barely improved Marxism of our times? After all, a vast majority of Karl Marx theories were concerned with redefining a new and better economic system. An economic system that serves “the people” and not the ruling class, one that provided “equal opportunity” and acted as an “autonomous entity” that is “decentralized” in nature. History will definitely put two and two together!
