Securities and Exchange Commission Chairman Gary Gensler said the regulator will be "very active" in bringing the digital currency market under its investor protection framework as the Biden administration increases scrutiny of cryptocurrencies.
Gensler's comments on Nov. 2 at a conference hosted by the Association for the Securities and Financial Markets Industry came a day after a panel led by the Treasury Department issued a report on stablecoins, which are cryptocurrencies. linked to assets such as the US dollar.
The report calls on Congress to impose a new regulatory framework around stablecoins and to limit the issuance of such digital assets to banks.
Stablecoins are issued by companies like Tether and Circle Internet Financial and are designed to combine the ability to quickly trade online like bitcoin with the stability of national currencies like the dollar. But the panel said stablecoins could fuel instability if users doubt the value of underlying assets that keep their prices stable, among other risks.
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At the conference, Gensler compared cryptocurrency technology, which has been around for about 13 years, to a teenager, adding that he believes the technology will not reach "adulthood" if it is not included in broader regulatory oversight for topics such as anti-money laundering and tax compliance.
“There is a lot of publicity. There are many investors, on the one hand, who are looking for performance, who hope to have a slightly better future, but these platforms at the moment, in general, have not entered the market. [Commodity Futures Trading Commission] or the SEC to be within an investor protection framework, ”Gensler said.
Many tokens in the crypto markets have died and many of the existing ones are raising money from the public, posing risks such as fraud and manipulation, Gensler added.
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Stablecoins have around 5% of the market value of crypto assets, but account for 75% or 80% of the volume of crypto transactions, Gensler said. He suggested that members of the securities trading group work with their attorneys and accountants to ensure consumer protections are in place, rather than simply seeking approval from banking and market regulators.
Write Mengqi Sun at mengqi.sun@wsj.com
This article was published by Dow Jones Newswires
