US Securities Exchange Commission Chairman Gary Gensler has declared the regulator is prepared to use every tool accessible to make sure all cryptocurrency platforms adhere to its rules. The SEC chief also mentioned that: “The reserves test is not a comprehensive accounting of a company’s assets and liabilities, nor does it fulfill the segregation of customer funds under securities laws.”
SEC Chair Gensler’s Crypto Regulations
SEC Chairman Gary Gensler articulated this point following the filing of charges by the securities regulator against former officers. The authorities highlighted the importance of ensuring that crypto platforms are compliant. Alameda Research CEO Caroline Ellison and Ex-FTX Executive Gary Wang were both charged for their role in defrauding equity investor. The SEC chief tweeted Wednesday:
Until Crypto platforms conform to time-tested securities laws. Investors will stay at risk. It is a priority for the SEC to make certain that the sector is compliant using all available means.
In an interview with Bloomberg on Thursday, Gensler stated that the SEC is just beginning to crackdown on crypto companies that do not abide by its rules.
“The runway is becoming shorter”, he said, emphasizing that it is possible for crypto companies and other entities to register with the SEC. Gensler explained: “Casinos in this Wild West are non-compliant middlemen.”
The SEC chief also spoke out about the matter of Proof of Reserves Reports (PORs), which are used by many cryptocurrency exchanges, such as Binance, to show that they have the funds to cover customer withdrawals. Noting that this practice doesn’t meet the disclosures required to protect investors, Gensler explained:
The reserves test is not a comprehensive accounting of assets and liabilities of a company, nor does it satisfy securities laws segregation requirements.
Gensler suggested that crypto-firms should “give customers confidence that their crypto is really there” by “complying with time-tested custody rules, segregation of client funds, and accounting rules.” The SEC is focusing on crypto-related financial records.
Some have criticized the chairman and securities watchdog for their enforcement-focused approach in regulating crypto. After FTX collapsed, they were also scrutinized. Gensler and SEC staff met with the former CEO of FTX Sam Bankman-Fried (SBF) multiple times.
Congressman Tom Emmer (R-MN). tweeted on Thursday: “Gary Gensler and the SEC had more meetings with SBF and FTX/IEX than anyone else in crypto, supposedly to create a special regulatory framework designed to benefit only FTX.” The legislator also wrote:
The SEC does not have the authority to make backroom deals with bad actors.
Congressman Emmer asked Gensler before he testifies before Congress concerning the consequences of his regulatory failures last month. It was stated that the fallout of FTX is not a failure in crypto but a failure by the SEC.
This week, the head of the SEC emphasized that regulation of cryptocurrency intermediaries and issuers is essential. Although it was previously stated that crypto tokens were securities, the crypto field isn’t very compliant. Recently, the securities regulator published its strategic plan over the next four years. Cryptography is one of its top priorities. In November The SEC’s Enforcement Division indicated that the cryptocurrency market remains the main focus.
What do you think of the SEC Chairman Gary Gensler’s statements about crypto regulation? Let us know what you think in the comments section.
