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SEC Chief: Give Us More Power Over Crypto Before ‘A Lot of People’ Get Hurt

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What You Need to Know

  • Large parts of the field of crypto are sitting astride of — not operating within — regulatory frameworks, Gensler says.
  • He calls for Congress to give the SEC more authority over cryptocurrency trading and lending.
  • Legislation granting that authority may get attached to one of the big spending bills this fall, Greg Valliere says.

SEC Chairman Gary Gensler said Tuesday that Congress should grant the securities regulator oversight authority over the cryptocurrency market or “a lot of people will be hurt.”

Right now, Gensler said in remarks before the Aspen Security Forum, “we just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West.”

The crypto asset class “is rife with fraud, scams and abuse in certain applications,” Gensler continued. “There’s a great deal of hype and spin about how crypto assets work. In many cases, investors aren’t able to get rigorous, balanced and complete information. If we don’t address these issues, I worry a lot of people will be hurt.”

Many tokens, Gensler maintained, “are offered and sold as securities.”

The SEC has taken, and “will continue to take our authorities as far as they go” when it comes to regulating cryptocurrencies, Gensler said.

Certain rules related to crypto-assets, he stated, “are well-settled. The test to determine whether a crypto asset is a security is clear.

“There are some gaps in this space, though: We need additional congressional 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.”

The SEC stands ready “to work closely with Congress, the administration, our fellow regulators, and our partners around the world to close some of these gaps,” Gensler added.

The legislative priority “should center on crypto trading, lending, and DeFi platforms,” he argued. “Regulators would benefit from additional plenary authority to write rules for and attach guardrails to crypto trading and lending.

Right now, he continued, “large parts of the field of crypto are sitting astride of — not operating within — regulatory frameworks that protect investors and consumers, guard against illicit activity, ensure for financial stability, and yes, protect national security.”

Greg Valliere, chief U.S. strategist of AGF Investments, said in his Wednesday morning Capitol Notes email briefing that Gensler, along with Sen. Elizabeth Warren, D-Mass., and other progressives will make cryptocurrency legislation “a major cause. At the best, the industry will face headline risk; at the worst, legislation will get attached to one of the big spending bills this fall, giving SEC the authority Gensler is seeking.”

Pictured: SEC Chairman Gary Gensler