SEC Chairman Says Crypto Market Won’t Mature Without Oversight
Securities and Exchange Commission Chairman
said the regulator will be “very active” in bringing the digital currency market under its investor protection framework, as the Biden administration increases scrutiny of cryptocurrencies.
Mr. Gensler’s comments Tuesday at a conference hosted by the Securities Industry and Financial Markets Association came a day after a Treasury Department-led panel issued a report on stablecoins, which are cryptocurrencies pegged to assets such as the U.S. dollar. The report asks Congress to impose a new regulatory framework around stablecoins and to limit the issuance of such digital assets to banks.
Stablecoins are issued by companies such as Tether Ltd. and Circle Internet Financial Inc. and are designed to combine the ability to trade quickly online like bitcoin with the stability of national currencies such as the dollar. But the panel said stablecoins could fuel instability if users come to doubt the value of the underlying assets that keep their prices stable, among other risks.
Mr. Gensler at the conference compared cryptocurrency technology, which has been around for about 13 years, to a teenager, adding that he believes the technology won’t reach “adulthood” if it isn’t brought within broader regulatory oversight for issues such as anti-money-laundering and tax compliance.
“There’s a lot of hype. There’s a lot of investors on one hand, reaching for yield, who are hoping to have a little bit better future, but these platforms right now, generally, have not come into either the [Commodity Futures Trading Commission] or the SEC to be within an investor protection framework,” Mr. Gensler said.
Many tokens in the crypto markets have died and many existing ones are raising money from the public, posing risks such as fraud and manipulation, Mr. Gensler added.
Stablecoins hold about 5% of crypto asset market value, but represent 75% or 80% of the crypto transactions volume, Mr. Gensler said. He suggested that members of the securities trade group work with their lawyers and accountants to ensure consumer protections are in place, rather than simply seeking approval from bank and market regulators.
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