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U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has re-emphasised the need for digital asset platforms to bring themselves within the protective umbrella of SEC regulation as the FTX collapse continues.
Speaking at a conference hosted by the Healthy Markets Association on Wednesday, Gensler bemoaned the “wild west” of the digital asset space highlighted by the FTX crisis—which he referred to as the “events the last two days.”
On Monday, Binance sparked a run on FTX’s bank after it said it would divest its holdings of FTX’s native FTT token—holding which amounted to almost one-fifth of all FTT in circulation.
Binance then suggested it would effectively bail FTX out of the liquidity crisis it had created by purchasing the company, a claim it rolled back on only a day later when it pulled out of the deal.
These events, Gensler said, were reminiscent of the spring collapse of the inter-linked Luna and ‘stablecoin’ TerraUSD tokens, which saw exchanges—including Binance—suspend transactions in those assets.
“We saw it in the spring as well, in real time, that investors are getting hurt,” Said Gensler. “It’s like Jenga blocks all built up, and as each block gets pulled out, it topples a bit. So I would not take the last few days as separate from what’s happened in the last eight months.”
For Gensler and the SEC the FTX crisis is just more proof, if it were needed, that tighter and more universal regulation is needed in the digital asset space.
“The runway is getting shorter for some of these intermediaries,” Gensler suggested. “I hope some of these firms take note and actually work with us and get registered, or we’ll certainly be doing what we need to do, being a cop on the beat.”
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