Securities and Exchange Commission (SEC) Chairman Gary Gensler gave an extensive overview of crypto market regulation during the recent Senate hearing. When asked by Republican Senator Patrick Toomey whether stablecoins qualify as securities, he replied that "they may well be securities." A stablecoin is a type of cryptocurrency that is usually pegged to a dollar or other currency. Later on, Gensler confirmed the opinion that cryptocurrency "staking" and lending services are likely to fall under the jurisdiction of the SEC.
"If you offer a loan product, it is likely that the loan product itself is in compliance with the securities laws," Gensler said.
The struggle on crypto lending has implications for exchanges and decentralized trading platforms. Coinbase, in particular, seems to be at odds with Gensler on several issues.
For example, on Tuesday, Gensler said Coinbase is not listed as a stock exchange, even though "they have dozens of tokens that could be securities."
As such, the SEC said it may try to block Coinbase due to its plans to launch a lending platform starting with the stablecoin USD Coin (USDC). Earlier, Coinbase received a "Wells notice" from the SEC, which is an official warning from the government that it intends to sue the company over the planned lending platform. Coinbase aims to offer a 4% return to investors who lend their coins in US dollars. It now says it is delaying the launch of the platform until October and said it "welcomes additional regulatory clarity."
The new rules may significantly complicate the process of accepting trading losses on cryptocurrencies. For example, if an investor bought Bitcoin (BTC) for $ 10,000 and sold it at a loss, he would have to wait 30 days to buy it again to be eligible for a tax write-off. Investors may still be able to buy other cryptocurrencies without breaking the rules, provided that the IRS does not consider them "nearly identical".
The rules will take effect after the 2021 tax year, according to the plan of Congressman Richard Neal.
Surprisingly, Bitcoin still traded higher on Wednesday, climbing 3% to $ 48,200. Ethereum, meanwhile, rose 3.6% to $ 3,500, while Cardano (ADA) was up 7.5% to $ 2.57. It seems that crypto markets are in no hurry with tax and regulatory changes yet.
Crypto stocks also rallied, with Coinbase surging 2% to $ 248. Grayscale Bitcoin Trust (GBTC) also gained 4.5% to $ 38.50.