Securities and Exchange Commission (SEC) Chair Gary Gensler has slammed the cryptocurrency sector for not providing adequate disclosure to investors compared to the traditional financial space. In an interview with CNBC, Gensler said that most cryptocurrencies are considered securities and must comply with the relevant laws.
Gensler's comments came a few days after Robinhood's crypto arm received a Wells notice for a potential enforcement action by the SEC. The regulator has issued similar notices to Coinbase and decentralized finance (DeFi) crypto exchange Uniswap. The cryptocurrency market has increasingly drawn regulatory scrutiny in recent years. During the interview, Gensler addressed this issue, offering insights into the intersection of cryptocurrency and traditional stock markets.
Broad Oversight
Regarding recent developments, Gensler maintains that the SEC has a mandate to uphold legal standards in the financial industry. He emphasized that the ongoing litigation and enforcement efforts seek to safeguard investor interest.
"But stepping back from it, the field of crypto assets, without prejudging any one of them, many of those tokens are securities under the law of the land, as interpreted by the U.S. Supreme Court. So we follow that law. And you, the investors, are not getting the required or needed disclosures about those assets," Gensler told CNBC.
Gensler outlined the SEC's expansive jurisdiction, overseeing a staggering $110 trillion in capital markets. While the stock market constitutes a significant portion, Gensler stressed that cryptocurrencies, though a smaller segment, are disproportionately plagued by scams and noncompliance with securities laws.
Amidst mounting concerns over crypto-related frauds, Gensler highlighted the lack of regulatory compliance within the crypto space. He emphasized the crucial role of disclosures in traditional securities markets, underscoring the disparity in transparency between crypto assets and traditional securities.
Gensler Reaffirms Crypto Regulation
Responding to queries regarding the attention dedicated to cryptocurrencies, Gensler underscored the media's role in shaping the discourse. Despite the spotlight on crypto, Gensler expressed his commitment to addressing broader market issues, including ensuring investor protection and market integrity. He maintains his long-standing stance that most cryptocurrencies are securities.
Recently, Robinhood CEO Vlad Tenev faulted the enforcement action by the SEC, saying: "Over the last three years, we’ve reached a state of regulatory onslaught that is harmful to American companies and consumers. The SEC’s continued attack on crypto, coupled with recent rule proposals like the one related to predictive data analytics, mark yet another improper attempt by the administrative state to stifle innovation."
This article was written by Jared Kirui at www.financemagnates.com.
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