Gary Gensler, chair of the United States Securities and Exchange Commission, or SEC, reiterated his call for investor protection in securities offered by crypto firms.
Speaking virtually at the Robert F. Kennedy Human Rights Compass Investor Conference on Tuesday, Gensler said the SEC would use its existing authority to focus on cryptocurrency projects and exchanges, warning people of potentially “too good to be true” returns on investments. According to Gensler, the bulk of the tokens currently in the crypto market fall under the regulatory purview of the SEC, subject to the same disclosure requirements as securities.
“We’ve seen again that lending platforms — they’re operating a little like banks,” said Gensler. “They’re saying: “Give us your crypto. We’ll give you a big return” [….] How does somebody offer 4.75% in the market today and not give a lot of disclosure?”
The SEC chair added:
“If it seems too good to be true, it just may well be too good to be true.”
In response to a question on the recent volatility in the crypto market, Gensler said that he continued to be “intrigued with the technology,” but did not directly address if the SEC would approve a Bitcoin (BTC) exchange-traded fund in the near future. He added that most projects in the crypto space were “likely to fail,” reiterating his warning of high returns without appropriate disclosures to the public.
The SEC chair’s remarks came after Senators Cynthia Lummis and Kirsten Gillibrand proposed a bill that, if passed, would give the Commodity Futures Trading Commission “clear authority over applicable digital asset spot markets” as opposed to the SEC. Both U.S. lawmakers met with Gensler in June to discuss finding the best balance of regulatory authority between the CFTC and SEC on cryptocurrencies.
Many in the crypto space have criticized the lack of regulatory clarity in the United States, which can be subject to interpretation from multiple government agencies. Gensler has repeatedly called on crypto projects to register with the SEC in an effort to provide investor protection.