U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler agrees with Senator Elizabeth Warren that the cryptocurrency markets need more regulatory protections for investors.
On July 7th, Senator Elizabeth Warren wrote an open letter to the SEC asking for Gary Gensler to address the highly opaque cryptocurrency space and institute new protections for investors.
In Gensler’s response to Warren’s call-to-action, he supports Warren’s perspective and says that he wants Congress to grant the SEC additional oversight and greater ability to monitor transactions, products, and platforms within the US crypto space.
The letter was released shortly after proponents of cryptocurrencies in Congress failed to revise the $1.2 trillion infrastructure bill, which contains additional tax-reporting requirements for a wide range of cryptocurrency participants, such as miners, software developers, or validators.
Gensler says that he believes the crypto markets pose numerous threats to the safety and financial stability of US investors.
“The world of crypto finance now has platforms where people can trade tokens and other venues where people can lend tokens. The American public is buying, selling, and lending crypto on these venues, both centralized and decentralized finance (“DeFi”) platforms. I believe these various platforms not only can implicate the securities laws; some platforms can also implicate the commodities laws and the banking laws. This raises a number of issues related to protecting investors and consumers, guarding against illicit activity, and ensuring financial stability.”
He gives a warning about stablecoins, a type of cryptocurrency that is pegged 1:1 to traditional currency like the US dollar, saying that stablecoins could be used to avoid traditional banking rules, “anti-money laundering, tax compliance, sanctions, and the like.”
In Gensler’s view, new legislation should prioritize crypto trading, lending, and DeFi protocols. He supports additional authorities and regulations in order to help protect investors, and he would like to give regulators more authority to place guardrails on crypto trading and lending.
“I believe we need additional authorities to prevent transactions, products, and platforms from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector.”
In a statement from Warren, she says she’s happy with Gensler’s plans and also pledges to work on additional legislation to close regulatory gaps.
“I’m glad SEC Chair Gensler agrees and has directed the SEC to use its full authority to address these risks, and that he has also identified where additional regulatory authority may need to be granted by Congress.”
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Featured Image: Shutterstock/Alberto Andrei Rosu
