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SEC Chair Gary Gensler Says The Agency Needs More Authority Over Crypto

Financial watchdogs across the globe have been trying to regulate the crypto sector to protect investors from the risks associated with the nascent sector. While these efforts had died down, the recent boom and crash of the crypto market saw regulators approach the issue with renewed interest.

The US Securities Exchange Commission (SEC) is the latest regulator that is looking to rein in the burgeoning asset class. According to a report on August 11, the agency’s Chair, Gary Gensler, wrote a letter responding to a previous letter from Senator Elizabeth Warren, which requested that he address the opaque and volatile crypto market and determine whether Congress needs to act on the matter. In response, Gensler said he believes investors using crypto platforms are not adequately protected.

Gensler added that both centralized and decentralized crypto trading platforms implicate either securities law, banking law, or commodities law. In turn, this brings about several issues that relate to the protection of consumers and investors, guarding against illegal activities, and ensuring financial stability. 

He also pointed out that stablecoins are used on crypto trading platforms to facilitate crypto-to-crypto trades. According to him, such coins help people circumvent several public policy rules linked to the US banking and financial system such as anti-money laundering, tax compliance, and sanctions among others.

Gensler informed Senator Warren that typical trading platforms have more than 50 tokens, with some having more than 100. He said that although each token’s legal status depends on facts and circumstances, chances are very low that a platform with 50-100 tokens does not support at least one security. With this in mind, the SEC Chair said he believes the current crypto market might have many unregistered securities which US citizens trade without the required disclosures or market oversight. 

He went on to note that, 

“Certain rules related to crypto assets are well-settled. The test to determine whether a crypto asset is a security is clear. The SEC has taken and will continue to take our authorities as far as they go. Over the years, the SEC has brought dozens of actions in this area, prioritizing token-related cases involving fraud or other significant harm to investors. We haven’t yet lost a case.”

Seeking more jurisdiction over the crypto market, Gensler said stock tokens, stable value tokens backed by securities, or any other virtual products that provide synthetic exposure to underlying securities are subject to securities laws. As such, they should work within the SEC’s securities regime, according to him.

Source: DailyCoin

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