The cryptocurrency trading industry has been labeled a “Wild West,” riddled with fraud and investor risk, by U.S. Securities and Exchange Commission Chair Gary Gensler, according to a Reuters report.
Fast facts
- Calling on Congress at the Aspen Security Forum to give the SEC more power to regulate the industry, Gensler said many of the tokens in the market were unregistered securities, leaving prices open to manipulation and investors vulnerable to risks. Gensler said he agreed with his predecessor, Jay Clayton, who said in 2018: “Every [initial coin offering] I’ve seen is a security.”
- Among Gensler’s requests were the power to oversee crypto exchanges, which are currently outside the SEC’s remit, and increased oversight of crypto lending, including decentralized finance.
- Gensler said: “This asset class is rife with fraud, scams and abuse in certain applications … We need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks.”
- The industry’s eyes have been on Gensler this week as Elizabeth Warren, who heads the Senate Banking Committee’s Subcommittee on Economic Policy, had requested a reply from Gensler by July 28 to an open letter she wrote him regarding crypto regulation. In the letter, Warren called the industry, “highly opaque and volatile,” and enquired as to whether the SEC had the proper authority to regulate it. Gensler has yet to formally reply.