Unveiling The Unstoppable SEC Influence On Crypto: A Game-Changing Revelation!
Many of you may have heard of the term “SEC” when participating in the cryptocurrency market. However, not everyone understands the structure and impact of these agencies on the financial market in general.
In this article, let’s also find out with Allinstation!
What Is SEC?
The Securities and Exchange Commission (SEC) is a federal agency that enforces securities laws in the United States. The agency was established in 1934, after the Great Depression of 1929.
Gary Gensler, the current chairman of the SEC, has caused a lot of controversy in the market.
Today, the primary goal of the SEC is to establish securities registration rules and oversee their enforcement, safeguarding investors’ rights and supporting them.
The Mission Of The SEC
The Securities and Exchange Commission (SEC) is one of the central agencies of the United States government, one of the four largest financial agencies, and has a significant impact on the traditional financial market (securities) as well as gradually has a significant impact on decisions in the decentralized financial market.
Due to the great influence of the US financial market, which is one of the leading economic markets in the world, traders around the world are particularly interested in the regulatory agencies related to it. For example, the SEC’s lawsuit against Binance exchange has caused the entire crypto market to be shaken.
The SEC’s main objectives include:
- Protect the interests of investors, including preventing fraud, ensuring that all securities products are operated transparently and safely for investors.
- Monitor the securities market and establish a legal framework for the registration process.
- Provide support for markets to ensure regulation and efficient operation.
- Support the development of the financial market by approving new securities and bonds.
- Control the information provided by companies to their investors.
- Monitor corporate acquisitions in the United States territory.
- Monitor private regulatory bodies and compliance with legal and financial auditing standards.
The Structure Of The SEC
The SEC is structured into 5 divisions:
- Investment Management Division: regulates and monitors investment funds and investment advisors.
- Corporate Finance Monitoring Organization ensures the monitoring and review of reports from issuers.
- Market Trading Department controls free trade participants.
- Legal Department conducts investigations into various violations.
- Risk Analysis Organization conducts research on risk, market strategy, and innovation.
The Impact Of The SEC On The Cryptocurrency Economy
Although the authority of this agency is only in the United States, the fact that the United States is still the largest financial center in the world today means that all decisions related to the domestic financial market have a huge impact on the global economy.
In this regard, agencies specializing in the field of cryptocurrencies also have to be directly supervised by the SEC in order to be granted permission to operate in the United States.
Mr. Gensler believes that the cryptocurrency market poses many risks. Currently, he only recognizes Bitcoin as a commodity (Commodity) rather than a security. He also believes that the cryptocurrency industry needs to comply with the regulations that have been put in place and that companies must submit all of their activities to the SEC. For example, the issuance of tokens, ICOs, and participation in trading on exchanges all need to be closely monitored.
Under the guise of protecting investors, the SEC under the leadership of Chairman Gary Gensler has made many decisions that are unfavorable to the decentralized financial industry. Notably, two consecutive lawsuits were filed against the two leading CEX exchanges, Binance and Coinbase, along with accusations that a number of tokens are “unregistered securities.” The agency also believes that Coinbase has illegally earned billions of dollars from organizing trading of coins on the list of securities. This information has raised a lot of fear in users, leading to a sharp decline in the price of a number of tokens, including Bitcoin.
Early 2023 also saw a lawsuit filed by the SEC against Paxos, the issuer of the BUSD stablecoin, alleging that the stablecoin is an unregistered security. This information caused the price of the BUSD stablecoin to depeg significantly and it took several days to recover to its previous peg.
Previously, in late 2020, the SEC also filed a lawsuit against Ripple, the company that manages the XRP token, alleging that Ripple had raised over $1.2 billion from 2013 through the sale of unregistered securities (XRP).
In addition, as it also plays a role in controlling the financial market, the SEC is also gradually turning its attention to the stablecoin (USDT and USDC) and DeFi markets and requiring relevant agencies to comply with the regulations put forward by this committee.
Summary
Through this article, you will have the latest information about this organization from its organizational structure, operating procedures, and impact on the decentralized financial market.
Under Gary Gensler, the crypto market has always had to face somewhat “unfair” decisions from the SEC due to the not-so-positive views of the incumbent president Joe Biden.
Therefore, investors need to be more cautious in this difficult time.
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* We hope this information will help you in your investment process, but this is not investment advice. Every investment carries risk, especially in this industry, so DYOR before making a decision.
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