Securities and Exchange Commission chief Gary Gensler said the agency is investigating how to extend investor protections to cryptocurrency trading platforms, Reuters reported Monday (April 4).
SEC oversight would reportedly see the agency regulate platforms on which securities and non-securities trading are "intertwined" by requiring them to register with the SEC, according to Gensler.
The agency plans to collaborate with the Commodity Futures Trading Commission, the sister trading regulator, to seek out platforms that trade both cryptocurrency-based security tokens and commodity tokens.
Gensler added that there could be token custody segregation between trading platform assets and client assets, which could help prevent theft.
โThe cryptocurrency market is highly concentrated, with most trading taking place on just a handful of platformsโฆthat perform similar functions as traditional regulated exchanges. So investors need to be protected in the same way,โ Gensler said, adding that any token that counts as a security must adhere to the same market integrity rulebook as other securities.
Reuters wrote that much cryptocurrency trading comes from offshore jurisdictions, which operate in a regulatory gray area because there is no central system of oversight, allowing trading to bypass regular banks or exchanges.
Read more: SEC: Investors May Sue Over Inaccurate SPAC Forecasts
PYMNTS wrote that the SEC plans to propose curbing legal protections that some special purpose acquisition companies (SPACs) have used before to make outlandish claims about companies they want to go public.
SPACs sometimes embellish projections about companies to try to get better results.
The report noted that limiting SPACs' safe harbor from legal liability could be in line with current rules on regular IPOs, where regulations prevent companies from providing guidance that may never happen.
Gensler said he has previously raised concerns about blank check signatures, saying the SEC is investigating inconsistencies in disclosure and how investors are informed about fees.
