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SEC Chair Claims Crypto Carries "Very Significant" Risk

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Thu, 21/07/2022 - 15:01
SEC Chair Claims Crypto Carries "Very Significant" Risk
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In a Thursday interview with CNBC, U.S. Securities and Exchange Commission Chair Gary Gensler said that there is "very significant" risk in the cryptocurrency field.

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Gensler has reiterated that he is neutral on cryptocurrency technology, but he is not neutral when it comes to investor protection. He has stressed that cryptocurrencies are a highly speculative asset class.

The government official also emphasized that most of the tokens in existence are securities since they were launched because of a group of sponsor-entrepreneurs raising money from the public. Last month, Gensler reaffirmed that Bitcoin is a commodity, separating it from other cryptocurrencies.

At the same time, the SEC chair remained mum about the regulatory status of Ethereum. The agency distanced itself from the Willian Hinman speech, in which the former top official declared Ethereum to be a nonsecurity. Critics believe that such an assessment has muddied the regulatory waters.

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The SEC chair also said that cryptocurrency lending firms might be investment companies.

He has pointed to the fact that lending companies are offering "pretty high returns," but the question remains how they are doing that. "What stands behind these promises?" Gensler asked.

The SEC boss claims that his agency will remain focused on getting such lending firms properly registered under securities laws in order to protect the public. Earlier this week, he noted that there was "a lot of noncompliance" within the crypto industry in a Bloomberg interview.

As reported by U.Today, Gensler said that the SEC could use exemptive authority in order to regulate cryptocurrencies. He also cautioned investors against buying into promises of exorbitant returns.

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