U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler released a video explaining how he plans to regulate crypto exchanges.” I have asked my staff to work directly with platforms to get them registered and regulated.” The SEC chief clarified.
SEC Chairman Gary Gensler’s video on regulating crypto exchanges
U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler released a video Thursday explaining the securities watchdog’s plans to regulate crypto exchanges and provide investor protection.
Gensler explained in the video the similarities and differences between crypto trading platforms and traditional exchanges like the New York Stock Exchange (NYSE).” When you trade in the stock market, you have certain protections.” He began, adding that investors are “protected against fraud, manipulation, execution, and the like.”
Noting that crypto platforms serve “millions, sometimes tens of millions” of retail customers who buy and sell crypto assets directly without going through a broker, the SEC Chairman elaborated. Because we have so many retail customers who trade on crypto platforms, we need to make sure those platforms offer the same protection as traditional security platforms.” He added:
So I asked my staff to work directly with the platforms to ensure that those crypto tokens come as well and are registered and regulated in the appropriate places as securities.
“Imagine passing all of your shares on the New York Stock Exchange, it will never fly.” He noted and reiterated.” Therefore, I asked the staff how to work with the platform to best ensure that your assets are protected.”
Gensler then raised another risk factor inherent in crypto exchanges.” Unlike traditional stock exchanges, crypto trading platforms may also act as market makers.” He explained.” When you sell tokens, one of the platforms may actually be buying on the other side,” the SEC chairman stressed and elaborated.
Stock exchanges do not do this, they do not serve as their own market makers because they create an inherent conflict of interest.
“Therefore, again, I am asking staff to consider whether it is appropriate to separate the market-making function on these crypto platforms,” he said.
In conclusion, the SEC Chairman emphasized that ” There is no reason to treat the encryption market differently simply because different technologies are used. He stated, “That would be like saying that drivers of electric cars don’t need seat belts because they don’t use gas.
He also tweeted on Thursday.” We have rules in the capital markets to protect the integrity of the market&&operations that protect against fraud. If firms build crypto markets that protect investors&and meet our market regulation standards, people will likely have greater confidence in that market.”
Gensler’s video received some criticism on Twitter. Some have accused Gensler of spending time and resources promoting himself instead of doing his job of regulating the crypto sector. Others accused the SEC of using an enforcement-centric approach to regulate crypto assets.
Congressman Bill Huizenga (R-MI) elaborated, tweeting to Gensler that “the SEC should stop using regulation by enforcement to provide ‘clarity’ in the market.”
No exchange wants to ‘enter and register’ without knowing what those market regulations are.”
Last week, regulators charged a former Coinbase employee in an insider trading case, naming nine crypto tokens as securities in the process.
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