The chairman of the U.S. Securities and Exchange Commission
(SEC), Gary Gensler, has written a letter to Senator Elizabeth Warren
about crypto regulation. After outlining his concerns and priorities in
the crypto sector, he said, “additional authorities” and “more resources
to protect investors in this growing and volatile sector” are needed.
SEC Chair Gensler Replies to Senator Warren About Crypto Regulation
On Wednesday, U.S. Senator Elizabeth Warren released the letter she
received from the chairman of the Securities and Exchange Commission
(SEC), Gary Gensler, in response to her July 7 letter about cryptocurrency regulation.
Gensler’s letter, which mirrors his speech
at the Aspen Security Forum last week, outlines numerous areas in
crypto the chairman is concerned about. It is dated Aug. 5 even though
Senator Warren demanded that he reply to her by July 28.
The former crypto professor
at the Massachusetts Institute of Technology (MIT) explained that there
are both centralized and decentralized finance (defi) platforms, adding
that some of them implicate securities laws, commodities laws, and also
banking laws. “This raises a number of issues related to protecting
investors and consumers, guarding against illicit activity, and ensuring
financial stability,” he opined. “Right now, I believe investors using
these platforms are not adequately protected.”
Noting that a typical crypto trading platform supports more than 50
tokens and many have well over 100 tokens, Gensler emphasized:
While each token’s legal status depends on its own facts
and circumstances, the probability is quite remote that, with 50 or 100
tokens, any given platform has zero securities.
“I believe we have a crypto market now where many tokens may be
unregistered securities, without required disclosures or market
oversight,” he stressed.
The chairman also mentioned that some unregulated overseas platforms
allow U.S. investors to trade cryptocurrencies using private virtual
networks (VPNs).
The SEC chief proceeded to outline his concerns regarding stablecoins, stating:
The use of stablecoins on these platforms may facilitate
those seeking to sidestep a host of public policy goals connected to our
traditional banking and financial system: anti-money laundering, tax
compliance, sanctions, and the like.
“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,” he described, reiterating what he said at the Aspen Security Forum:
In my view, the legislative priority should center on crypto trading, lending, and Defi platforms.
“We stand ready to work closely with Congress, the Administration,
our fellow regulators, and our partners around the world to close some
of these gaps,” Gensler concluded.
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