Securities and Exchange Commission (SEC) chief Gary Gensler spoke out rather harshly about the cryptocurrency asset market, noting that the industry’s lack of compliance could damage the credibility of the U.S. financial markets.
“With such widespread noncompliance, it’s not at all surprising that there are so many problems in the cryptocurrency markets,” Gensler said, speaking at the Piper Sandler Global Exchange and FinTech conference on Thursday. – We’ve seen this kind of thing before. It’s all reminiscent of the situation we had in the 1920s, before the federal securities laws were passed. Speculators, scammers, con artists and pyramid schemes. People were standing in line in bankruptcy courts.”
“Cryptocurrency markets should not be allowed to undermine the public’s well-earned confidence in the capital markets. They should not be allowed to harm investor confidence,” the text of Gensler’s speech, which is published on the SEC’s website, reads.
The regulator has faced sharp criticism after accusations against cryptocurrency exchanges Coinbase and Binance.
The SEC reportedly accused Coinbase of operating without registration as an exchange, broker and clearing agency in the United States. The same charges were brought by the regulator against Binance Holdings Inc. In total, the SEC charged Binance and its founder Changpeng Zhao with 13 securities violations.
Gensler noted that most cryptocurrencies are subject to U.S. securities laws, so “most cryptocurrency brokerage companies must also comply with those laws.”
Appropriate registration of cryptocurrency exchanges, he said, is “the foundation of providing basic protections for investors and markets.”
“Cryptocurrency intermediaries may need to separate lines of business, put in place sets of rules to ensure protection against fraud and manipulation, properly segregate customer funds, and change their approach to clearing,” Gensler said. – That’s what protects investors. The fact that they built their platforms without taking that into account shouldn’t be a free pass to put investors at risk.”
International rating agency Moody’s on Thursday changed its outlook on Coinbase Global’s ratings to negative from stable, noting “uncertainty about the extent to which the SEC charges affect the company’s business model and cash flow.”
Coinbase’s corporate rating was affirmed at “B2.”
