SEC chairman calls for greater crypto investor protection

Gary Gensler stresses the need for greater crypto investor protection

US SEC                                 
The head of the US regulator described crypto assets and tokens as ‘highly speculative assets’ - Photo:Shutterstock
                                

The chairman of the US Securities and Exchange Commission, Gary Gensler, says the current crash in the cryptocurrency market has highlighted the urgent need to improve investor protection in the industry. 

Speaking at the Wall Street Journal’s CFO Network Summit, the head of the US regulator described crypto assets and tokens as “highly speculative assets” and said: “In this crypto space, many of the tokens, maybe not all of them, but many of the tokens have the key attributes of securities: a group of entrepreneurs making money from the public and the public hoping for a profit. And that makes them under the securities laws.” 

Gensler has made such comments before. However, his distinction was seized upon by those who believe that Bitcoin is superior to all other digits assets, so-called “Bitcoin Maximalists”. 

One of the most well-known advocates of this theory, Michael Saylor, CEO of  MicroStrategy, highlighted Gensler’s comments and said: “Other than Bitcoin, most cryptos, especially PoS networks, represent unregistered securities lacking the full and fair disclosures necessary to protect investors.” 

Saylor has remained resolute in his long-term belief in Bitcoin, despite his company having lost $1.2bn (£1bn) on its investment because of the current market slump.

BlockFi and future actions

Gensler also highlighted the SEC’s recent $100m enforcement action against the crypto lender BlockFi as evidence of the regulator’s increased determination to ensure greater protection for cryptocurrency investors. 

Pointing to lending platforms that offer rates of up to 17%, cryptocurrency exchanges rates offering rates above 10% and some stablecoins that purport to be backed by US dollars, Gensler said: “You can see the investing public can be attracted to that. But what stands behind those claims?

“To the extent that they are unregistered securities offerings, non-compliant securities offerings or investment companies we will talk to them, try to get them registered but also bring, when necessary, enforcement actions.”

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