Cryptocurrencies, the SEC aims at regulation: “Too many frauds”

Stable Coins and tokens are also in the sights of the American regulator of financial markets. A register of trading platforms is being studied. President Gensler: "Rising risks, we must avoid regulatory flaws''. In 2021 crypto-assets worth over 14 billion were stolen

05 Apr 2022

US financial markets regulator SEC prepares for cryptocurrency cryptocurrencies such as Bitcoin: Securities and exchange commission chairman Gary Gensler said his agency intends to exercise greater control and oversight of the digital currency market, now valued at $ 2 trillion. dollars, to protect investors from fraud and massive losses.

The SEC's plan is to create a register of cryptocurrency trading platforms and subject them to regulation. Among the rules under study is the separation of asset custody from other activities in order to minimize risks.

Gensler's speech follows the executive order signed less than a month ago by US President Joe Biden. The order asked government agencies to assess issues related to cryptocurrencies and prepare reports on the "future of money" and the role that virtual currencies will play. Biden also instructed the government to examine the risks and benefits of creating a digital dollar managed by the Federal Reserve.

Index of topics

• Adjust platforms to protect investors

• Illicit risk with stablecoins

• Token funding, too much opacity

Adjust platforms to protect investors

"Cryptocurrency trading platforms play a similar role to traditional regulated exchange markets," Gensler said at a Penn law capital markets association conference. "Investors should be protected in a similar way." Gensler, whose statements were reported in the US media, recalled that crypto assets worth more than $ 14 billion were stolen last year by fraud or cyber-attack.

The problem with crypto-platforms, Gensler said, is that they have "millions and sometimes tens of millions of retail customers who buy and sell directly on the platform without going through a broker." For this reason, the SEC will consider whether to regulate them as retail exchange markets rather than for institutional investors.

The SEC will also work with the Commodity futures trading commission to regulate platforms that trade both security tokens and cryptocurrency-based commodity tokens.

Illicit risk with stablecoins

The SEC also intends to address the regulation of stablecoins (whose value is linked to that of real currencies) and crypto-tokens (often used in startup investments). For Gensler, the stablecoin market, valued at $ 183 billion, presents reasons for concern over its potential use in illicit activities. Crypto-to-crypto transactions, the SEC chairman said, allow users to avoid passing through the banking system, making it more difficult to detect tax-evasive money laundering operations.

Additionally, stablecoins are often owned by cryptocurrency platforms, creating a potential "conflict of interest and market integrity issues that need more vigilance."

Token funding, too much opacity

Regarding crypto-tokens, Gensler said the main use is by entrepreneurs who raise funding from outside investors. This is a procedure that skips several steps compared to the traditional one which requires you to send detailed information to the SEC.

Regulators have always used effective tools to regulate financial markets and the fact that technologies exist today does not mean that they cannot do the same, concluded the number one of the SEC: “We must apply the same protections to crypto-markets. Let's avoid jeopardizing 90 years of stock market laws by creating loopholes and arbitrariness in the laws ”.

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