US Securities and Exchange Commission (SEC) Chairman Gary Gensler has outlined how the SEC plans to regulate the crypto industry. Focusing on investor protection, Gensler discussed the SEC’s concerns regarding crypto trading, exchanges, lending, the DeFi platform, and exchange-traded funds (ETFs).
Gary Gensler Outlines the SEC’s Crypto Priorities
SEC Chairman Gary Gensler outlined the agency’s plans regarding regulation of cryptocurrencies at the Aspen Security Forum on Tuesday. he told:
Right now, we don’t have enough investor protection in crypto. To be honest, it’s like the Wild West at the moment. This asset class is fraught with fraud, scams, and abuse in some applications… If we don’t address these issues, I’m concerned that many people will be hurt.
He elaborated: “There is a lot of hype and spin about how crypto assets work. In many cases, investors are not able to get rigorous, balanced and complete information.”
Regulating crypto platforms: Gensler says many are offering unregistered securities
The SEC chairman explained that many tokens are offered and sold as securities. “I urge employees to continue to protect investors in case of unregistered sale of securities,” he said.
Subsequently, the chairman said that he believes crypto trading platforms, lending platforms and decentralized finance (DeFi) platforms “could incorporate securities laws,” and in some cases even commodity laws and banking laws. .
He also emphasized that cryptocurrency trading platforms do not have the same investor protections as traditional exchanges such as the New York Stock Exchange (NYSE). Furthermore, he added that many foreign platforms allow US investors to trade cryptocurrencies using virtual private networks (VPNs), thus bypassing regulations.
Make no mistake: to the extent that there are securities on these trading platforms, under our laws they must register with the Commission unless they meet the exemption… if a lending platform is offering securities. If so, it also falls under the jurisdiction of the SEC.
Regulating Investment Vehicles With Crypto Exposure, Bitcoin ETFs
The chairman also addressed investment vehicles exposed to crypto assets, including mutual funds that invest in bitcoin futures on the Chicago Mercantile Exchange (CME).
“I expect filings with respect to exchange-traded funds (ETFs) under the Investment Companies Act (the ’40 Act) will take place. When combined with other federal securities laws, the ’40 Act provides significant investor protections,” Gensler said. said, adding:
Given these important safeguards, I look forward to staff review of such filings, especially if they are limited to these CME-traded bitcoin futures.
Gensler also addressed the custody of crypto assets, saying: “Custody protection is key to preventing theft of investor assets, and we will try to maximize regulatory protection in this area.”
SEC needs more resources to protect investors
Gensler stressed that the SEC has taken its “officers as far as they go” and will continue to do so.
He also claimed, “The test is clear to determine whether a crypto asset is a security or not.” Nevertheless, he acknowledged that there are “some gaps” in regulating the crypto space, elaborating:
We need additional congressional officials to prevent transactions, products and platforms from falling through regulatory cracks. We also need more resources to protect investors in this growing and volatile sector.
The former MIT blockchain professor stressed that the SEC stands ready to work closely with Congress, the administration and other regulators around the world to oversee the crypto space. They said:
In my view, legislative priority should be focused on crypto trading, lending and DeFi platforms. Regulators would benefit from additional full authority to write rules and attach railings for crypto trading and lending.
What do you think of Gensler’s comments on regulating the crypto industry? Let us know in the comments section below.
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