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The chairman of the U.S. Securities and Exchange Commission (SEC) Gary Gensler says that cryptocurrency investors are inadequately protected.
Testifying before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on Tuesday, Gensler stated that cryptocurrency investors are vulnerable to scams and other illegal activities due to the lack of “enough investor protection” in the space.
“Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending. Frankly, at this time, it’s more like the Wild West or the old world of ‘buyer beware’ that existed before the securities laws were enacted.
This asset class is rife with fraud, scams, and abuse in certain applications. We can do better.”
The SEC chairman says that a significant percentage of players in the cryptocurrency space are disregarding the existing regulations.
“Right now, large parts of the field of crypto are sitting astride of – not operating within – regulatory frameworks that protect investors and consumers, guard against illicit activity, and ensure for financial stability.”
While arguing that some tokens are securities that need to be registered as such, Gensler says the SEC welcomes dialogue with cryptocurrency projects and platforms.
“I’ve suggested that platforms and projects come in and talk to us. Many platforms have dozens or hundreds of tokens on them. While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50, 100, or 1,000 tokens, any given platform has zero securities.
Make no mistake: To the extent that there are securities on these trading platforms, under our laws they have to register with the Commission unless they qualify for an exemption.”
Gensler claims he is “technology-neutral,” viewing it as a potential catalyst for change that requires regulatory measures to sustain itself and protect investors.
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