United States regulators such as the Securities Exchange Commission have long warned against Bitcoin and other cryptocurrencies, but now there is another reason to crack down on the investments. According to a new letter sent to SEC chairman Gary Gensler, cryptocurrencies have led “unsophisticated investors,” including “many minorities,” to lose significant amounts of money.
“As a result of targeted marketing, a significant amount of these losses have been borne by unsophisticated investors, including many minority investors seeking rapid investment growth without the knowledge or information to assess the risks associated with such investments,” read a letter from the SEC’s Investor Advisory Committee (IAC) to Gensler.
The letter attacks Bitcoin and crypto assets, arguing: “Many investors recently have suffered significant losses as a result of their investments in crypto assets. It is estimated that these losses have been more than $2 trillion In addition to unilaterally appropriating jurisdiction over digital assets.”
Some have already criticized the letter, including Charles Hoskinson, founder of proof-of-stake (PoS) blockchain, Cardano (ADA), who sarcastically wrote “Crypto is racist” in response to the letter.
Some have pointed out that Blacks and Hispanics appear to be choosing cryptocurrencies as their preferred form of investment.
Interesting take by the @SECGov, since all available evidence suggests the opposite. pic.twitter.com/St66nN4m5q
— Liberty.Chris. (@Orbital_Lexicon) April 11, 2023The letter further argues for enhanced oversight of crypto markets, stating the SEC should “aggressively continue to assert authority over crypto assets that are securities and over trading platforms that list or transact in such crypto asset securities.” In addition, the agency should “seek appropriate additional appropriations from Congress where needed to adequately oversee the crypto securities industry.”
Recent reporting has shown that the SEC is launching a crackdown on cryptocurrencies. Politico writes: “The SEC’s campaign for compliance could cement the regulator’s authority over crypto — ushering in a new age of policing in a market that Gensler has called the ‘Wild West.’ It would also assuage concerns from progressive advocates and lawmakers who want the agency to move faster and more aggressively to protect consumers and investors.”
In many ways, the issue of cryptocurrencies has become a partisan one. Cryptocurrencies are not only being championed by grassroots Republicans, but also leading politicians. Sen. Ted Cruz, for example, has said that he wants Texas to “become the center of the universe for Bitcoin and crypto,” while Texas Gov. Greg Abbott tweeted that he wants Texas to be “#1 for blockchain & cryptocurrency.” Sen. Rand Paul became the first presidential candidate to accept Bitcoin in donations when he ran in 2015 and even said that he believed that Bitcoin could replace the U.S. dollar as the world’s reserve currency at some point. A number of controversial conservative activists and pundits cut off from the banking system say that cryptocurrencies are one of the few methods they can rely on for funding.
The SEC under Biden has taken a drastically different approach to crypto. Critics of the administration’s actions against crypto say that it is using bad actors such as FTX, which collapsed in spectacular fashion last year, as a pretext to crack down on all things crypto and gain complete control over the space. Bringing the issue of race to the table may be the latest sign that the SEC is poised to take more action against crypto markets and increase regulations.
