Gary Gensler (chairman of the U.S. Securities and Exchange Commission) has described how the SEC intends to regulate the cryptocurrency industry. Gensler addressed investor protection concerns and discussed the SEC’s plans to regulate crypto trading, exchanges lending, platforms, defi platforms and exchange-traded fund (ETFs) regulation.

Gary Gensler Outlines SEC’s Crypto Priorities

At the Aspen Security Forum on Tuesday, Gary Gensler, Chairman of

SEC, presented the agency’s plans for regulation of cryptocurrency at the Aspen Security Forum. He described:

Right now, we just don’t have enough investor protection in crypto. It’s more like the Wild West at the moment. This asset class is full of fraud, scams and abuse in some applications. I worry that a lot will be affected if we don’t address these problems.

He explained that there is a lot of hype surrounding crypto assets. In many cases, investors aren’t able to get rigorous, balanced, and complete information.”

Regulating Crypto Platforms: Gensler Says Many Are Offering Unregistered Securities

The chairman of the SEC explained that many tokens can be offered and sold as securities. He stated, “I have urged staff members to continue to protect investors when unregistered securities sales are made.”

Next. The chairman stated that he believes crypto trading platforms and lending platforms and decentralized finance platforms (defi), platforms “can implicate securities laws” and, in some cases, the commodities laws as well.

He stressed that cryptocurrency trading platforms don’t offer the same protection for investors as traditional exchanges like the New York Stock Exchange. He also stated that some overseas platforms permit U.S. investors trade cryptocurrencies via virtual private networks (VPNs), bypassing regulations.

Gensler emphasized:

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 meet an exemption … If a lending platform is offering securities, it also falls into SEC jurisdiction.

Regulating Investment Vehicles With Crypto Exposure, Bitcoin ETFs

The chairman also discussed investment vehicles that offer exposure to crypto assets, such as mutual funds that invest on bitcoin futures on Chicago Mercantile Exchange.

“I anticipate that there will be filings with regard to exchange-traded funds (ETFs) under the Investment Company Act (’40 Act). When combined with the other federal securities laws, the ’40 Act provides significant investor protections,” Gensler opined, adding:

Given these important protections, I look forward to the staff’s review of such filings, particularly if those are limited to these CME-traded bitcoin futures.

Gensler also discussed custody of crypto assets. He stated: “Custody protections can be key to preventing the theft of investor assets and we will look to maximize regulatory protections here .”

SEC Needs More Resources to Protect Investors

Gensler stated that the SEC will continue to exercise its “authorities as long as they go .”

He claimed that there were “some gaps” in the regulation of crypto assets.

We need more Congressional powers to ensure that transactions, products and platforms do not slip through regulatory cracks. This volatile and growing sector requires additional resources.

The former MIT blockchain professor proceeded to emphasize that the SEC is ready to work closely with Congress, the administration, and other regulators worldwide to oversee the crypto space. He stated:

In my opinion, crypto trading, lending and defi platform should be the priority of legislation. Additional plenary authority would be a benefit to regulators in order to create rules and attach safeguardrails for crypto trading and lending.

What do you think about Gensler’s comments on regulating the crypto industry? Please leave your comments below.

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