To the extent there are securities on these trading platforms, they must register with the Commission unless they meet an exemption, Gensler said. “I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight,” Gensler stated. In noting that a typical trading platform has 50 or even 100 tokens or more, he explained that while each token’s legal status depends on its own facts and circumstances, the probability is remote that any given platform has zero securities. “This raises a number of issues related to protecting investors and consumers, guarding against illicit activity, and ensuring financial stability,” Gensler noted. In both instances he said he believes that not only can these various platforms implicate the securities laws, but some platforms can also implicate commodities laws and banking laws.
Gensler’s letter to Warren echoes remarks he made in early August at the Aspen Security Forum, where he outlined the need for greater investor protection and oversight of digital currencies.
Warren urged the Commission to use its full authority to address risks that endanger consumers and investors, and undermine the safety of financial markets.
Regulators would benefit from additional plenary authority to write rules for and attach guardrails to crypto trading and lending,” Gensler wrote in response to a July 7 letter from Warren inquiring about the sufficiency of the SEC’s authority to regulate crypto platforms. “In my view, the legislative priority should center on crypto trading, lending, and DeFi platforms. Elizabeth Warren (D-MA), Gensler suggested that the Commission needs additional authority to prevent transactions, products and platforms from falling between regulatory cracks, as well as more resources to protect investors in what he described as a “growing and volatile sector.” He also has called on Congress for more authority to regulate the field. The SEC, Labor Department and Congress are gearing up to “protect investors” from the emerging cryptocurrency market.Ĭontending that large parts of the crypto market are not operating within regulatory frameworks that protect investors, SEC Chairman Gary Gensler has indicated that the Commission plans to take action.