U.S. Securities and Exchange Commission (SEC) chairperson Gary Gensler told Congress yesterday that his agency doesn't plan to follow China in banning crypto. But that doesn't mean he's content with the current approach to regulating cryptocurrencies, decentralized finance platforms and stablecoins.
"Currently, we just don’t have enough investor protection in crypto finance, issuance, trading, or lending," Gensler said in his testimony to the House Committee on Financial Services. "Frankly, at this time, it’s more like the Wild West or the old world of 'buyer beware' that existed before the securities laws were enacted. This asset class is rife with fraud, scams, and abuse in certain applications. We can do better."
Gensler said he wants the SEC to collaborate with other financial regulators and Congress to better address the crypto market. The agency has several projects in place to facilitate that collaboration, he said, and he identified five areas of focus at the agency that effectively cover the vast majority of the cryptocurrency landscape:
- The offer and sale of crypto tokens
- Crypto trading and lending platforms
- Stable value coins
- Investment vehicles providing exposure to crypto assets or crypto derivatives
- Custody of crypto assets
That information was revealed in Gensler's prepared remarks. He also said during his testimony that he believes cryptocurrency exchanges need to register with the SEC, that Congress needs to provide more guidance regarding the regulation of decentralized finance platforms, and that stablecoins are "like poker chips at a casino" that can threaten the U.S. economy if their popularity continues to grow.
CoinDesk noted that Gensler has made that comparison before, and the SEC has shown increasing interest in crypto-related offerings in recent months, so most of Gensler's comments didn't come as a surprise. Perhaps the closest thing to a revelation was his confirmation that the SEC doesn't want to ban cryptocurrencies—and that he's not actually looking to undermine or hostile to the crypto market.
"I am technology-neutral," Gensler said in his prepared remarks. "I think that this technology has been and can continue to be a catalyst for change, but technologies don’t last long if they stay outside of the regulatory framework. I believe that the SEC, working with the CFTC and others, can stand up more robust oversight and investor protection around the field of crypto finance."
You can watch Gensler's testimony before the House Committee on Financial Services here: