The SEC will continue to work with Congress and other regulatory bodies in order to protect investors from fraud. They are committed to providing a fair marketplace for all parties involved, which includes ensuring that everyone knows the risks of trading crypto assets before they do so.
US top financial regulator Chairman, Gary Gensler announced on Wednesday that he wants to provide people similar protection when dealing with the New York Stock Exchange.
The recent price surge of Bitcoin is no secret to anyone. At a House Financial Services and General Government subcommittee hearing today, Chairperson Gensler discussed the attention it has been getting in its media coverage.
With Bitcoin’s recent success, the SEC is cracking down on its competition. He says that “many of these tokens” are investment contracts under securities law and has taken action in 75 cases involving such laws within a few years.
The US SEC Chairman does not think Bitcoin is ready for mass adoption. Before it can be adopted, the regulatory environment must provide more protection to investors and gaps should be filled in that will allow consumers to understand what they are investing in before making a decision.
In the digital world, it can be difficult to protect investors. There are many challenges and gaps for investor protection in these markets that may not comply with federal securities laws.
For example, tokens currently on the market could offer benefits but still carry risks of non-compliance because they have been categorized as security when actually being an investment opportunity or utility token.
The lack of regulatory oversight is worrisome for potential investors who want assurances their investments will stay safe from fraudsters looking to prey upon them by taking advantage of any weak points within the system which would jeopardize anyone’s safety if left unchecked.
Furthermore, the Securities and Exchange Commission (SEC) has yet to register any crypto exchanges.
Altogether, this leaves investors with less protection than they are used to from traditional securities markets and is leading fraudsters to exploit the opportunity for possible manipulation of prices.
The Securities and Exchange Commission (SEC) has prioritized token-related cases which involve significant harm or even potential market manipulation by issuing criminals who might make off millions in profits. This issue needs addressing quickly as it only takes a handful of hiccups before an entire industry falls victim to its own success.
Cryptocurrency and DeFi Lending Platforms
Gensler emphasized that crypto lending platforms and decentralized finance (DeFi) platforms have brought more challenges for investors. He pointed out the SEC is trying to protect them, stating “We want our broker-dealers who are custody specialists in this area of expertise – we’re not asking somebody else like banks or other financial institutions to do it.”
Most of these challenges are a result of increasing risks like price volatility which can be hard to hedge against without significant capital reserves or leverage from peer-to-peer networks because it requires active participation with other market participants–something many retail traders aren’t doing enough research into before investing their money while not understanding how different types of cryptocurrencies work together across exchanges.
Earlier in February, it was reported that Hester Peirce — a Commissioner at the United States Securities and Exchange Commission (SEC) and an outspoken proponent of crypto regulation — called for new crypto regulations as adoption skyrockets.