SEC Chairman Pushes for More Crypto Cops on the Beat
Gary Gensler, the SEC chair, was asked on Bloomberg TV whether the efforts to protect the consumer related to cryptocurrency are complicated by non-compliance and lack of growth in the agency’s staff. Gensler discussed the need for more enforcement of current laws and lively debate with Congress to create new rules, “the capital markets really wouldn’t work without cops on the beat and rules of the road,” replied the SEC chair.
During his discussion on July 27, the head of the SEC demonstrated the Commission is still taking aim at the crypto markets despite what is seen as legal setbacks related to its authority. Gensler said that the cryptocurrency sector remains underhanded and unregulated. “The securities laws are there to protect you, and this is a field rife with fraud, rife with hucksters. There are good-faith actors as well, but there are far too many that aren’t.”
The overall theme of the conversation is that the crypto asset class lacks adequate protections for investors.
Gensler calmly appealed to investors not to assume that they are getting full protection despite the securities laws applied to many tokens in the crypto space. “A lot of investors should be aware that it’s not only a highly speculative asset class, it’s also one that they currently should not assume they are getting the protections of the securities law,” he said. He alleged that some crypto platforms were “co-mingling and trading against” investors.
As it relates to crypto exchanges and how they operate, the SEC chair said crypto violates laws that other exchanges abide by. “You as investors are not getting the full, fair, and truthful disclosure, and the platforms and intermediaries are doing things that we would never in a day allow or think the New York Stock Exchange or NASDAQ would do,” declared Gensler.
Earlier this month, a U.S. judge ruled that Ripple did not break securities law by selling its XRP token on public exchanges. The decision sent positive ripples through the entire crypto market and sent the value of XRP soaring. If tokens can not be deemed securities, transactions within the asset class may not fall under the SEC at all. This leaves open the question of who will regulate and oversee crypto and its exchanges.
Take Away
SEC chair Gary Gensler warned investors in late July about the lack of regulation for cryptocurrencies. He told Bloomberg TV the sector was rife with “fraud” and “hucksters,” leaving investors at risk. Gensler made listeners aware that some crypto platforms were “co-mingling and trading against” investors.
It is likely that there will ultimately be regulation handed down from Congress and enforced by an agency, which may include self-regulation, but after the Ripple decision, the oversight will not automatically be from the SEC. It appears Gary Gensler has taken to the interview circuit in order to sway opinion in favor of the SEC.
Managing Editor, Channelchek
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