Gary Gensler, chair of the Securities and Exchange Commission (SEC), says that the crypto markets should be regulated the same way traditional securities are.
In a new episode of the Office Hours video series, Gensler explains how the US stock market and crypto exchange platforms are alike, and thus should offer similar consumer protections.
“These platforms, the crypto platforms, like stock markets, bring together buyers and sellers. Crypto platforms have millions, sometimes tens of millions of retail customers directly buying and selling on the platform without going through a broker.
With so many retail customers trading on crypto platforms, we should make sure those platforms offer similar protections. So I’ve asked our staff to work directly with the platforms to get them registered and regulation to ensure that those crypto tokens come in as well and register where appropriate as a security.”
Gensler goes on to say that the market-making aspect of crypto exchanges should be regulated out of existence as it creates conflicts of interest.
“Crypto trading platforms also may act as market makers. It means that when you sell your tokens, one of the platforms may actually be buying on the other side. Stock exchanges don’t do this. They don’t serve as their own market makers because that creates inherent conflicts of interest.
Thus again I’ve asked staff whether it would be appropriate to segregate out the market-making functions of these crypto platforms.”
Gensler then says that there’s no reason for crypto assets to be treated differently than securities when it comes to regulations.
“There’s no reason to treat the crypto market differently just because a different technology is used. That would be like saying to drivers of electric cars don’t need seatbelts because they don’t use gas.”
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