The SEC chair believes that ICOs constitute unregistered security offerings and so the tokens require disclosures and oversight
The chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, has stated that the cryptocurrency sector is currently a Wild West and needs more regulation. He said this during an event yesterday, adding that proper regulation would be the task of the regulatory agency.
Gensler lamented that at the moment, there is not enough investor protection in the crypto sector. “This asset class is rife with fraud, scams, and abuse in certain applications. There’s a great deal of hype and spin about how crypto assets work. In many cases, investors aren’t able to get rigorous, balanced, and complete information. If we don’t address these issues, I worry a lot of people will be hurt,” he said.
The SEC chair is concerned that most cryptocurrencies are sold as securities. Gensler added that he supports former SEC chair Jay Clayton’s assertion that every initial coin offering (ICO) is a security and the tokens issued afterwards need to be treated as such.
Gensler explained, “You see, generally, folks buying these tokens are anticipating profits, and there’s a small group of entrepreneurs and technologists standing up and nurturing the projects. I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight.”
He added that the tokens are open to price manipulation, and this is the aspect the SEC wants to fight against. With that in mind, the regulatory agency is seeking to regulate the activities of cryptocurrency exchanges, stablecoins, decentralised finance (DeFi) tokens and the growing crypto lending sector.
Gensler also said there is a need to regulate the stock tokens that have become popular on some crypto exchanges. The SEC chair wants the US Congress to grant the agency additional powers and resources to expand its current oversight of the cryptocurrency space.
