U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has called for more investor protection in crypto markets. “This asset class is rife with frauds, scams and abuse in certain applications,” he said. “In many cases, investors are unable to obtain rigorous, balanced and complete information about tokens or trading and lending platforms.”
Gary Gensler wants more investor protection in the crypto markets
SEC Chairman Gary Gensler raised concerns about the cryptocurrency markets at an Investor Advisory Board meeting last week.
The Investor Advisory Board, established by Section 911 of the Dodd-Frank Act, advises the SEC on regulatory priorities, including “initiatives to protect investor interests and promote investor confidence and integrity. of the securities market ”.
During his speech, Gensler raised some concerns about the crypto markets.
He began by acknowledging that “Satoshi Nakamoto’s ‘Bitcoin White Paper’ and the crypto markets that followed were catalysts for change.” In August Gensler said “innovation is real” from the pseudonymous creator of Bitcoin and “it has been and could continue to be a catalyst for change in finance and money.”
Citing the market capitalization of all cryptocurrencies, Gensler told the Investor Advisory Board: “This is an asset class that belongs to the public policy frameworks of protecting investors, guarding against illicit activities and to protect our financial stability ”. He nods:
Unfortunately, this asset class is rife with frauds, scams and abuse in some applications… In many cases, investors are unable to get rigorous, balanced and complete information about tokens or platforms trading and lending.
“At the moment, we just don’t have enough investor protection in crypto,” the SEC boss said. “The American public buys, sells and lends cryptos on trading, lending and decentralized finance (challenge) platforms, where there are significant gaps in investor protection.” He underlined:
This leaves the markets open to manipulation. It makes investors vulnerable. If we don’t fix these issues, I’m afraid a lot of people will be hurt.
Gensler went on to explain that many “crypto tokens are offered and sold as securities.” Commenting on whether a token qualifies as a headline, he said, “There’s actually a lot of clarity on that front. In the 1930s, Congress established the definition of a security, which included about 20 elements, such as stocks, bonds, and notes.
The SEC chairman continued, “One of the elements is an investment contract,” noting that many tokens in the crypto markets “may be unregistered securities, with no required disclosure or market oversight.”
Gensler is of the opinion:
It’s best not to wait for a big spill in aisle three – the crypto aisle, with all of its tokens, exchanges, and loans outstanding – to resolve investor protection issues.
The SEC chairman concluded his speech by stating that crypto platform operators and token issuers should “come in and talk to SEC staff.”
He added: “Financial innovations throughout history do not thrive for long outside our public policy frameworks. If this area is to endure or reach any of its potentials to be a catalyst for change, we would do better to integrate it into public policy frameworks.
What do you think of SEC Chairman Gary Gensler’s comments on investor protection and the manipulation of the crypto market? Let us know in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons, CNBC TV18
Disclaimer: This article is for informational purposes only. This is not a direct offer or the solicitation of an offer to buy or sell, nor a recommendation or endorsement of any product, service or business. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or allegedly caused by or in connection with the use of or reliance on any content, good or service mentioned in this article.