On Wednesday, U.S. Senator Elizabeth Warren released the letter she received from the chairman of the Securities and Exchange Commission (SEC), Gary Gensler, in response to her July 7 letter about cryptocurrency regulation.
Gensler’s letter, which mirrors his speech at the Aspen Security Forum last week, outlines numerous areas in crypto the chairman is concerned about. It is dated Aug. 5 even though Senator Warren demanded that he reply to her by July 28.
The former crypto professor at the Massachusetts Institute of Technology (MIT) explained that there are both centralized and decentralized finance (defi) platforms, adding that some of them implicate securities laws, commodities laws, and also banking laws. “This raises a number of issues related to protecting investors and consumers, guarding against illicit activity, and ensuring financial stability,” he opined. “Right now, I believe investors using these platforms are not adequately protected.”
Noting that a typical crypto trading platform supports more than 50 tokens and many have well over 100 tokens, Gensler emphasized:
While each token’s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities.
“I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight,” he stressed.
The chairman also mentioned that some unregulated overseas platforms allow U.S. investors to trade cryptocurrencies using private virtual networks (VPNs).
The SEC chief proceeded to outline his concerns regarding stablecoins, stating:
The use of stablecoins on these platforms may facilitate those seeking to sidestep a host of public policy goals connected to our traditional banking and financial system: anti-money laundering, tax compliance, sanctions, and the like.
“I believe we need additional authorities to prevent transactions, products, and platforms from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector,” he described, reiterating what he said at the Aspen Security Forum:
In my view, the legislative priority should center on crypto trading, lending, and Defi platforms.
“We stand ready to work closely with Congress, the Administration, our fellow regulators, and our partners around the world to close some of these gaps,” Gensler concluded.
What do you think about Gensler’s comments to Senator Elizabeth Warren? Let us know in the comments section below.
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