Gary Gensler, chairman of SEC believes that crypto platforms act just as traditional regulated exchanges therefore he along with Commodity Futures Trading Commission plans to regulate and register all crypto platforms.
At Penn Law Capital Markets Association’s annual conference
At the annual conference, Gary Gensler SEC Chairman talked about protecting crypto investors just as any other investor after announcing several initiatives he has been planning to include a $1.5 trillion worth Cryptocurrency market into investor protections.
He also talked about working on ways to register crypto trading platforms as exchanges, which may require them to pull out their custody and market-making services from other businesses. President Joe Biden had ordered an examination of the risks and benefits of cryptocurrencies sometime back in response to the several cyber attacks and other events like the theft of crypto-assets worth more than $14 billion by a scammer last year, following which SEC chairman Gensler declared his plans regarding administering and controlling the crypto market. While comparing crypto assets to other trading systems used in equity and fixed income markets, he talked in length about the crypto platforms to be used by tens of millions of retail customers without working through a broker to buy or sell like any other trading systems that are used by institutional investors primarily.
Retaliation against Jay Clayton
Gensler urges not to undermine securities law to create some regulatory loopholes as he talks about applying for protection in crypto markets just like any other while retaliating towards his forerunner, Jay Clayton who commented that investments in crypto tokens are under the Howey test.
While talking about things SEC can do in crypto tokens and stable coins, he explains how Stablecoins are much less volatile than cryptocurrencies. Stablecoins take up three important policy issue sets:
(1) public policy pondering over financial stability and monetary policy.
(2) their use for illegal activities
(3) issues on investor protection
Since Stablecoins are also used in centralized exchanges, what makes them particularly useful in a crypto exchange of this kind is the fact that fiat currencies take a long time to process, but their tokenized counterparts are standard blockchain entities that move very quickly. He includes that many crypto platforms own Stablecoins for about 85% of their borrowing and trading activities, which creates a conflict of interest and questions the integrity of the market which could benefit from oversight.