Gary Gensler Says SEC is “Going to Use the Enforcement Tool” If Crypto Firms Do Not Register
Because DeFi tokens offer some kind of return, the watchdog needs to have oversight on them, said the Chair, as “the public is not as protected as it could be.”
Securities and Exchange Commission (SEC) Chair Gary Gensler again called for more oversight of cryptocurrency trading platforms.
This week, Gensler reiterated the need for crypto exchanges to register with the watchdog while saying they are open to working with platforms around issues like custody of digital assets. And if they do not “work to get registered within the law,” the SEC is “going to use the enforcement tool,” he added.
“Work with us,” Gensler told former SEC Chairman Jay Clayton on Wednesday during the Digital Asset Compliance and Market Integrity Summit, sponsored by crypto firms.
“These platforms need to come in, get registered, come within the investor protection remit.”
Both Gensler and Clayton said they see a productive future for crypto but only in an “environment of trust” and as the crypto space centralizes and consolidates.
According to Gensler, much like in the early days of the internet, which saw competition in the 1990s leading to high concentration — which was “just the fact of the economics of networks,” — the two sides of the market will be brought together on online trading of crypto assets.
During the fireside chat at Solidus Labs' and CryptoCompare's DACOM conference, Gensler drew parallels between the wild banking era when many unregulated institutions issued their own forms of currency, leading to the centralization of the dollar and the central bank. Now, as crypto projects raise money while looking to “skirt” authorities, “that's similar to the Wild West,” he said.
With crypto remaining outside of the regulatory perimeters, Gensler said he’s worried about the spill that could come in the form of stablecoins, lending, or lack of sufficient information to investors.
“Right now the public is not as protected as it could be, as it ought to be,” he said. “Technologies don't long exist outside of public policy norms. People get hurt. It's far better inside the public policy framework.”
As for decentralized finance (DeFi), Gensler said many DeFi tokens offer some kind of return; as such, the watchdog needs to have oversight on them. For this, he is looking at how the commission dealt with the digitization of their activities that fell under their purview and “similar activity should have similar regulation.”
Amidst this, Congresswoman Maxine Waters (D-CA) announced that the top executives of eight major crypto firms will testify before the U.S. House Financial Services Committee on Dec. 8 at the hearing entitled, “Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States.”
These executives include Jeremy Allaire, CEO of Circle; Sam Bankman-Fried, FTX CEO; Brian Brooks, Bitfury CEO; Chad Cascarilla, Paxos CEO; Denelle Dixon, CEO Stellar Development Foundation; and Alesia Haas, Coinbase CFO.