Cryptocurrencies will be able to become a widespread asset only if clear rules are in place, the new head of the SEC believes. He claims that tighter crypto regulation is needed.
Gary Gensler, the new head of the US Securities and Exchange Commission (SEC), said that cryptocurrencies could only go mainstream if regulators set clear rules. In an interview with Bloomberg, Gensler noted that, in his opinion, investors need additional protection against fraud.
“While I’m neutral on the technology, even intrigued—I spent three years teaching it, leaning into it—I’m not neutral about investor protection. If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud.”
Gensler suggested that digital assets can accelerate economic progress, as it happened already before when new technologies and financial instruments appeared. But the widespread use of cryptocurrencies can only be achieved if there is a clear framework that meets the goals of public policy. He likened it to car driving, which only became widespread when the government laid down clear driving rules.
Speed limits and traffic lights provided public safety but also helped cars become mainstream. “It’s only with bringing things inside—and sort of clearly within our public policy goals—that a technology has a chance of broader adoption,” he said.
According to Gensler, the SEC already has broad powers to oversee the crypto market. Currently, the US financial watchdog is working in seven key areas: ICOs, crypto exchanges, lending platforms, DeFi, stablecoins, vaults and exchange-traded funds.
“I’ve asked the staff to use all of our authorities anywhere we can.”
Gensler believes that tighter regulation of crypto exchanges will help better control the flow of cryptocurrencies. In May, Gensler called on Congress to pass a bill that would expand the commission's powers to monitor cryptocurrency exchanges.
Gensler also echoed the words of his predecessor, Jay Clayton, who called all ICO tokens unregistered securities.
“Generally, folks buying these tokens are anticipating profits, and there’s a small group of entrepreneurs and technologists standing up and nurturing the projects. I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight.”
According to Gensler, such tokens must be registered, and their issuers must comply with existing US federal laws.