SEC gets criticized due to uncertainty regarding regulation of the crypto market

The SEC believes that market manipulation associated with the bankrupt crypto platform FTX is far from the only precedent in the industry. According to the head of the department, Gary Gensler, mixing of user funds and abuse in the context of client interests is typical for many cryptocurrency projects.

The head of the US Securities and Exchange Commission pointed out the difference between existing stock exchanges and platforms related to digital assets. The latter, in his opinion, often carry out activities that are prohibited among the former.

“The NYSE can’t actually also run a hedge fund and trade against their customers or make markets ahead of their customers. But in the crypto field, that’s what’s happening on a lot of exchanges, they’re commingling all these functions the SEC chairman explained his position.

He was answered by Tennessee Senator Bill Hagerty, who recalled the lack of transparency in the issue of control over the crypto industry in the United States. It is the uncertainty of the regulator that is a good reason for cryptocurrency platforms to operate offshore.

However, Gary Gensler disagreed with Hagerty, noting that only companies that choose not to comply with US securities laws do this. At the same time, the official emphasized that such laws serve as excellent protection for capital markets.

Mr. Gensler said that the majority of cryptocurrencies are securities because “the investing public is buying or selling crypto security tokens because they’re expecting profits derived from the efforts of others in a common enterprise.” As such, he maintained that issuers need to provide full and fair disclosure to investors, in accordance with federal securities laws.

What do you think about this situation?