The SEC is investigating the foreclosure of companies on crypto exchanges

The U.S. Securities and Exchange Commission is exploring ways to regulate cryptocurrency trading platforms, which could involve outsourcing some of their operations, says Gary Gensler, chairman of the regulator.

in the a speech on MondayGensler said that crypto trading platforms, which handle more than $100 billion in transactions daily, differ from traditional exchanges because they do more things — like custodial client assets and trade exchange-traded tokens as “market makers.”

Citing stats that showed clients’ crypto assets worth $14 billion last year.

He said he’s asked staff to consider similar moves for crypto exchanges’ market-making activities, as problems have surfaced when they act as “principals against their clients on their platforms.”

Directing staff to investigate these issues could be a first step for the Commission to formally establish a rule.

Gensler reiterated his belief that most cryptocurrencies — and the platforms they’re traded on — should be regulated by the SEC since the tokens are considered securities under US law.

“Today, many entrepreneurs are raising money from the public by selling crypto tokenswith the expectation that managers will build an ecosystem where the token is useful,” Gensler said.

“These aren’t laundromat brands,” he added. “Someone is building an ecosystem to make it useful, which will attract more users to the project. Therefore, it is important that we work to get crypto tokens, which are securities, registered with the SEC.”

Building on his previous calls for registering crypto platforms with the SEC, Gensler said he has asked staff to work to “register the platforms themselves and regulate them in a manner similar to exchanges.”

He added that since “few” cryptocurrencies are commodities under US law — that work “like digital gold” — the SEC also wants to work with the Commodity Futures Trading Commission, a derivatives regulator he once headed, ” how we could tackle such platforms together”.

“There is no reason to treat the crypto market differently just because a different technology is used. We should be technology neutral, but not policy neutral,” he said at a conference at the University of Pennsylvania.

“These crypto platforms play similar roles to traditional regulated exchanges,” he added. “Investors should be protected in the same way. The US has the largest capital markets because investors trust them.” The SEC is investigating the foreclosure of companies on crypto exchanges

Adam Bradshaw

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