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US SEC Chair says no reason to give cryptocurrencies special status

Gary Gensler, the chair of the United States Securities and Exchange Commission (SEC), shared his opinions on how to manage crypto markets in a published article of the Wall Street Journal on August 22. He compared the crypto industry with the automobile sector and argued that, just as the safety requirements for the automobile industry haven’t changed in the previous 60 years, neither have the investor protection standards which indicates that crypto also does not need any special status. 

According to Gensler, there is no justification for giving digital assets or cryptocurrencies a higher status. They ought to be handled more like financial markets. He also mentioned how the collapse of the crypto lending platforms such as BlockFi this year has hurt investors. Investors are forced to knock on the door of the court since their money has been frozen. He remarked:

“There’s no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology. Recent market events show why it is critical that crypto firms comply with securities laws.
In recent months, some crypto lending platforms have frozen their investors’ accounts or gone bankrupt. When it comes to bankruptcy, these investors have to get in line at the court.”

The SEC is eager to apply securities regulations to the crypto industry. In this context, the SEC has been engaged in an 18-month legal struggle with blockchain firm Ripple. The $100 million Settlement of the crypto lending company BlockFi earlier this year is mentioned by Gensler. According to the chairman of the SEC, the problem wasn’t with the loans BlockFi had taken out. It was instead what it did with the client’s lent assets. Additionally, the company claimed that investors were not given the necessary disclosures by the SEC. He claims:

“Compliance with our laws protects the investing public. Unfortunately, some platforms that offer crypto lending aren’t complying with the applicable requirements.”

He continues by saying that the regulations governing lending are nothing new and apply to crypto lending services as well. He promised to encourage crypto lending platforms to contact the SEC. Gensler thinks that the crypto sector and investors would profit more from this.

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Vaishali Goel
Technology enthusiast, explorer and academic scholar. Currently exploring the crypto world. Join me in my journey to see how crypto, NFT and Metaverse will change the world.
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