US Securities and Exchange Commission Chairman Gary Gensler has published a video detailing future SEC plans to regulate cryptocurrency exchange platforms.
The US Securities Exchange Commission chairman has delivered insight into SEC plans to work directly with cryptocurrency exchanges to accelerate regulatory changes via a video published on Twitter outlining plans to provide expanded protection to cryptocurrency investors.
In the 3-minute-long video Chairman Gary Gensler presents an analysis of why the SEC plans to regulate the cryptocurrency market under US securities law. The market regulator has announced that it is currently in discussions with a number of cryptocurrency exchanges in order to ensure that they comply with the SEC in the same manner as traditional securities exchanges.
We have rules in our capital markets to safeguard market integrity & protect against fraud & manipulation. If a company builds a crypto market that protects investors & meets the standard of our market regulations, people will more likely have greater confidence in that market. pic.twitter.com/ZxdBfvmqXP— Gary Gensler (@GaryGensler) July 28, 2022
SEC Chair Plans to Expand Retail Investor Protection
The cryptocurrency and digital asset ecosystem currently lack legal frameworks designed to protect investors and users from manipulation and fraud at the same level of detail or scale as traditional markets.
Within the video posted to Twitter, Gensler highlights the similarities between traditional securities exchanges such as the New York Stock Exchange (NYSE) and cryptocurrency markets, noting that traders and investors active within traditional markets are provided with a greater level of protection from “fraud, manipulation, running, and the like.”
Cryptocurrency exchange platforms, as noted by Gensler, currently serve millions and in some cases, tens of millions of users, all of whom participate in trading activities such as buying and selling cryptocurrency without a broker. Crypto exchanges, according to Gensler, should provide retail customers on crypto exchanges with the same protections available to traditional securities exchanges.
“I’ve asked our staff to work directly with the platforms to get them registered and regulated to ensure that those crypto tokens come in as well and register where appropriate as securities.”
SEC Takes Aim at Crypto Exchanges
Addressing custodial issues present within the cryptocurrency exchange platform ecosystem, Gesler highlights the risk presented by providing crypto exchanges with sovereign control over assets held in “hot” hosted wallets.
“Imagine handing over all of your stock to the New York Stock Exchange, that would never fly,”
The SEC is currently actively engaged in an ongoing lawsuit with Ripple regarding the securities classification of XRP, alongside an investigation into potential insider trading at international cryptocurrency exchange platform Coinbase.