At a House Appropriations Committee oversight hearing Wednesday, Securities and Exchange Commission (SEC) Chairman Gary Gensler told Democratic Congressman Mike Quigley, “There are a lot of crypto tokens that do fall under the securities laws.”
Gensler also said that the SEC has been consistent in its communications with market participants that those using initial token offerings to raise capital or engage in securities transactions must comply with federal securities laws. Asset managers who invest in unregistered securities may also be subject to the securities laws.
During the hearing, Congressman Mike Quigley (IL) asked Gensler about the possibility of creating new regulatory categories for cryptocurrencies.
Gensler said the breadth of the field makes it difficult to provide adequate consumer protections, noting that the SEC has filed only 75 lawsuits despite thousands of token projects. He argued that the best place to implement consumer protections is on trading venues.
Tokens currently on the market as securities may be offered, sold and traded in violation of federal securities laws. In addition, no exchanges that trade crypto tokens have yet registered as exchanges with the SEC.
Overall, this significantly reduces investor protection and correspondingly increases the opportunity for fraud and manipulation compared to traditional securities markets. the SEC has prioritized token-related cases involving token fraud or significant harm to investors.
Gensler said it hopes to work with other regulators and Congress to fill the gaps in investor protection in the crypto market.
Without “rules that work,” Gensler fears that market participants will take orders from traders. He said he wants to bring similar protections put in place by venues such as the New York Stock Exchange (NYSE) and Nasdaq to crypto platforms.
But Gensler said more money may be needed to develop and enforce those rules. The agency currently spends about 16 percent of its budget on new technology, and the companies it regulates have considerable resources. Those resources have also shrunk by about 4 percent, according to Janssler. He said cryptocurrencies present new risks and require more resources.
This isn’t the first time he’s identified cryptocurrency exchanges as the biggest consumer protection gap. At a May 6 hearing before the House Financial Services Committee, Gensler said the lack of a dedicated market regulator for crypto exchanges means there are not enough protections against fraud or manipulation.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/sec-chairman-many-cryptocurrencies-fall-under-securities-laws-wants-to-work-with-congress-to-regulate-crypto-exchanges/
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