The chairman of the US Securities and Exchange Commission (SEC), Gary Gensler, has published a video explaining how the agency plans to regulate crypto exchanges. “I have directed our staff to work directly with the platforms to get them registered and regulated,” the SEC chief revealed.
SEC Chairman Gary Gensler’s video on regulating crypto exchanges
US Securities and Exchange Commission (SEC) Chairman Gary Gensler published a video on Thursday explaining how the securities watchdog plans to regulate crypto exchanges and provide investor protection.
In the video, Gensler explained the similarities and differences between crypto trading platforms and traditional exchanges such as the New York Stock Exchange (NYSE). “When you trade in a stock market, you have certain protections,” he began, adding that investors are “protected against fraud, manipulation, running and the like.”
The SEC chairman noted that crypto platforms serve “millions, sometimes tens of millions” of retail customers who directly buy and sell crypto assets without going through a broker: “With so many retail customers trading on crypto platforms, we should ensure that these platforms offer similar protection ” like traditional security platforms. He added:
So I have asked our staff to work directly with the platforms to get them registered and regulated to ensure that these crypto tokens also come in and are registered as securities where appropriate.
“Imagine handing over all your shares to the New York Stock Exchange, which would never fly,” he noted, repeating: “That’s why I’ve asked staff how to work with platforms to best ensure your assets are protected.”
Gensler then addressed another risk factor inherent to crypto exchanges. “Unlike traditional stock exchanges, crypto trading platforms can also act as market makers,” he described. “When you sell your tokens, one of the platforms can actually buy on the other side,” the SEC chairman emphasized, elaborating:
Exchanges do not do this, they do not act as their own market makers because it creates inherent conflicts of interest.
“Therefore, I have again asked staff to consider whether it would be appropriate to separate market-making functions on these crypto platforms,” he said.
In conclusion, the SEC chairman emphasized: “There is no reason to treat the crypto market differently just because a different technology is used. It would be like saying that drivers of electric cars do not need seat belts because they do not use gas.”
He also tweeted on Thursday: “We have rules in our capital markets to ensure market integrity and protect against fraud and manipulation. If a company builds a crypto market that protects investors and meets the standard of our market regulations, people are more likely to have more confidence in that market.”
Gensler’s video received some criticism on Twitter. Some people accuse Gensler of spending time and resources promoting himself instead of doing his job of regulating the crypto sector. Others criticized the SEC for using an enforcement-centric approach to regulating cryptoassets.
Congressman Bill Huizenga (R-MI) tweeted to Gensler, “SEC should stop using regulation by enforcement to provide ‘clarity’ in the market,” elaborating:
No exchange wants to “come in and sign up” without knowing what these market regulations are.
Last week, the regulator charged a former Coinbase employee in an insider trading case, naming nine crypto tokens as securities in the process.
What do you think of SEC Chairman Gary Gensler’s video on regulating crypto exchanges? Let us know in the comments section below.
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