Gary Gensler, the chair of the US Securities and Exchange Commission (SEC), called on Congress to give the agency more authority to stronger regulate cryptocurrency exchanges, lending, and platforms riddled with fraud and investor risk by his words.
At a global conference on Tuesday, the SEC chair said the crypto market involves many tokens, which may be unregistered securities and leave prices open to manipulation and millions of investors vulnerable to risks.
“This asset class is rife with fraud, scams, and abuse in certain applications,” he said. “We need additional congressional authorities to prevent transactions, products, and platforms from falling between regulatory cracks.”
After the crypto market reached a record capitalization of $2 trillion in April, many investors stocked their portfolios with digital tokens, but the regulator’s oversight of the market remains patchy.
The industry has been waiting, how Gensler, as a Democratic appointee who became the SEC head in April, will approach the regulation after his previous words that the crypto market should be brought within traditional financial regulation. Before, the SEC under Gensler and his predecessor Jay Clayton has repeatedly balked at approving a crypto exchange-traded fund over concerns over transparency and potential manipulation in the Bitcoin cash market.
Gensler provided Tuesday more of his vision, saying he would like Congress to give the SEC the power to oversee cryptocurrency exchanges, which are not currently within the SEC’s remit.
He also called on legislators to give the SEC more power to oversee crypto lending and decentralized finance (DeFi) platforms, which allow lending without traditional banks.
“If we don’t address these issues, I worry a lot of people will be hurt,” claimed the chair of the SEC.
Recently, Democratic Senator Elizabeth Warren called regulators to tighter control the crypto market in a July letter to the SEC; Gensler, in response, asked Congress to consider granting him more autonomy to regulate the sector. He also underscored that “stock tokens, a stable value token backed by securities, or any other virtual product that provides a synthetic exposure to underlying securities … are subject to the securities laws.”
Commenting on the last SEC statements, Kristin Smith, leader of the Washington-based Blockchain Association, said that while the crypto industry is eager to help find “workable solutions” to the SEC’s concerns, it does currently comply with oversight by state authorities and other federal regulatory bodies.
“The industry shares many of Chair Gensler’s goals, including smart, appropriate regulation of the crypto industry, encouraging legal certainty, robust market integrity, and investor/customer protection,” she said. “The crypto industry is far from unregulated.”
As earlier reported, Treasury Secretary Janet Yellen told regulators that the U.S. government must move quickly to establish a regulatory framework for stablecoins, a rapidly growing class of digital currencies. The President’s Working Group on Financial Markets expects to deliver regulatory recommendations for stablecoins in the coming months.
Main image source CNBC.