U.S. Securities and Exchange Commission Chair Gary Gensler has called on Congress to give the agency more power over the cryptocurrency industry, comparing it to a fraud-ridden “Wild West.”
At a conference on Tuesday, Gensler amplified the crypto concerns he first expressed at his Senate confirmation hearing in March when he said the SEC must ensure that crypto markets “are free of fraud and manipulation.”
“This asset class is rife with fraud, scams and abuse in certain applications,” he told the Aspen Security Forum. “We need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks.”
Gensler suggested Congress should be prioritizing granting financial regulators clear oversight of crypto trading, lending, and peer-to-peer decentralized finance (DeFi) sites that allow lenders and borrowers to transact in cryptocurrencies without traditional banks.
“If we don’t address these issues, I worry a lot of people will be hurt,” he warned.
Gensler’s comments followed a year in which cryptocurrencies, according to Fortune, have seen buy-in like never before, reaching a record capitalization of $2 trillion in April. “The industry has been waiting with bated breath to see how Gensler … will approach oversight of the market,” Reuters said.
At his confirmation hearing, Gensler credited bitcoin and other cryptocurrencies with bringing “new thinking to financial planning and investor inclusion.” But on Tuesday, he voiced doubts that crypto can ultimately become a substitute for fiat currency, saying that no single digital asset “broadly fulfills all the functions of money.”
He also emphasized that “stock tokens, a stable value token backed by securities, or any other virtual product that provides synthetic exposure to underlying securities … are subject to the securities laws.”
Kristin Smith, executive director of the Blockchain Association, said the industry ” shares many of Chair Gensler’s goals, including smart, appropriate regulation of the crypto industry, encouraging legal certainty, robust market integrity, and investor/customer protection.”
“Where we differ with Chair Gensler is his characterization of the growing crypto economy as the ‘Wild West,’” she said. “The crypto industry is far from unregulated.”