Dan Gallagher, the Chief Legal Officer at Robinhood, believes the US government will not form a regulatory framework for the crypto space anytime soon. He said this during an interview earlier today while discussing the likely outcome of six crypto executives testifying before lawmakers at Capitol Hill.
According to Gallagher, such conversations are theoretically existential to the crypto space. While people assume Congress will act and legislate in the nascent digital asset space, he believes it would be a stretch to think the US government will start regulating crypto any time soon.
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Nonetheless, he believes the testimonies of the six crypto executives before the House Committee on Financial Services would be informative for the US Securities Exchange Commission and its Chair, Gary Gensler. He added that the crypto world in the US comprises two camps.
Out of the two groups, Gallagher believes the larger part comprises entities that run away from regulation. However, the other part is running into the fire of regulation. According to him, Robinhood falls under this category and is already heavily regulated. He claims the financial services company can deal with regulation.
Still, he hopes that the government creates rational rules that do not stifle innovation or deny investors choice.
The SEC does not have the authority to regulate crypto
Gallagher further noted that the SEC does not have the authority to regulate the crypto market as it wants. Although he is unsure what the SEC would do if it gets the power it seeks, Gallagher said the regulator should avoid implementing the same measures the Commodity Futures Trading Commission (CFTC) applied to derivatives.
He agreed that the SEC should introduce investor protection policies. However, Gallagher believes the SEC’s enforcement unit should stop bringing enforcement cases serially because it harms the crypto industry. According to him, the regulator should be appreciative of cooperative players trying to help it chart the crypto regulation path.
Commenting on the increasing scrutiny on interest products backed by crypto, he said the government is right to be wary of such products. He added that their structure warrants the government checking whether investor protection rights are in place. He pointed out that such products are popular, but Robinhood has steered away from them.
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