The newly-appointed SEC Chairman Gary Gensler gave the most elaborated briefing of his view on cryptocurrencies and the need of higher regulatory oversight.
On Tuesday, August 3, Gary Gensler, the newly appointed chairman of the US Securities and Exchange Commission (SEC) spoke in detail about crypto regulations.
Speaking at the Aspen Security Forum, the SEC chair stressed the need for stricter crypto regulations to ensure investor protection. Besides, he called cryptocurrencies “highly speculative stores of value”. Gensler said:
“Right now, we just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West. This asset class is rife with fraud, scams, and abuse in certain applications. If we don’t address these issues, I worry a lot of people will be hurt”.
This has been the first time that Gensler spoke in detail about cryptocurrencies. The SEC Chairman is reportedly said to have a crypto-friendly outlook towards digital assets. However, he hasn’t shied from expressing his apprehensions about the asset class.
The Growth of Unregistered Securities
The SEC Chairman noted that many tokens in the market are sold as securities but not registered with the regulator. Thus, it leaves them open to price manipulation and other vulnerabilities. Gensler said:
“I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight. This leaves prices open to manipulation. This leaves investors vulnerable. While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities”.
Reaching past $2.5 trillion in valuations during April 2021, the crypto market has drawn the attention of regulators. Besides, the US SEC also has been actively monitoring the recent market volatility. Everyone in the crypto community is keen to see how Gensler will approach crypto regulations during his regime.
Gensler Seeks Help from Congress for Crypto Regulations
The SEC chairman said that he would like Congress to him additional powers to oversee the crypto sector. He also expressed the desire to oversee other sectors like decentralized finance (DeFi) and crypto lending.
“The world of crypto finance now has platforms where people can trade tokens and other venues where people can lend tokens. I believe these platforms not only can implicate the securities laws; some platforms also can implicate the commodities laws and the banking laws,” Gary Gensler said.
Recently, Democratic Senator Elizabeth Warren stressed the need for regulators to get a grip on the market. Last month in July, she referred to the crypto market as “highly opaque and volatile”. Post Genseler’s comments on Monday, Warren acknowledged his desire to have a higher regulatory oversight on the crypto sector.
Lastly, the SEC chairman also commented on the latest concept of stock tokens in the market. He noted that “stock tokens, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities … are subject to the securities laws.”