Crypto’s “Wild West” — what regulation could mean for retail investors and the industry

Butch Cassidy and the Crypto Kid... Crypto is traded 24/7 around the globe, without many rules to govern it. Many countries, including the US, want guardrails. Last week, SEC Chairman Gary Gensler said the Commission would try to maximize regulatory protection of the "Wild West" of crypto. Gensler wants crypto to be regulated in the same way the SEC oversees securities (like: stocks, bonds).

• What: Crypto markets and exchanges don't have the same controls and protections as the stock market. No single regulator oversees them.
• Why: Many cryptocurrencies are classified as commodities, not securities. So, they're not under the purview of the Securities and Exchange Commission (SEC).
• But: Gensler believes many cryptos function like unregistered securities – and should be SEC-regulated.

The good, the bad, and the cryptic... The total market cap of cryptocurrencies skyrocketed this year, as coins like Bitcoin, Ether, and Dogecoin gained mainstream appeal. That's also led to more volatility, crypto scams, and money laundering. Now, more countries are considering crypto regulation — or are already enforcing it.

• The SEC wants to protect crypto investors against fraud and manipulation. That could mean crypto becomes less anonymous — and more regulated.
• The EU already proposed tightening rules on crypto transfers to make sure they're traceable. Meanwhile, India is considering a crypto ban.

TBD... Because of its limited purview, the SEC’s strategy has centered on suing token sellers case-by-case. Gensler is calling on US lawmakers to grant the SEC more power to oversee the industry. But regulation could take years.