Benzinga - Pointing out the disproportionate amount of fraud and scams within the relatively small crypto sector compared to its size in the broader market, SEC chair Gary Gensler on Tuesday highlighted the agency's focus amid the market’s rapid expansion.
What Happened: “We are seeing a $10 trillion capital market,” Gensler noted, clarifying that “Crypto is a small piece of our markets but it’s an outsized piece of the scams and frauds and problems in our markets.”
In an interview with CNBC, he stressed that without adequate regulatory frameworks, these issues are likely to persist, emphasizing the necessity for robust oversight.
Gensler's remarks reflect ongoing concerns about the compliance of various crypto tokens with existing securities laws. He pointed out, “Much of this field is noncompliant with the protections of our securities laws,” which contributes to a higher ratio of issues relative to its market size.
During the interview, Gensler addressed the recent actions taken by the SEC, including a live litigation case against Coinbase (NASDAQ:COIN), which he referenced to illustrate the SEC’s role as the “cop on the beat.”
He said, “We have a really important responsibility… ensuring that people that are asking you to put your money into buy or sell securities are following the law.”
The discussion also touched on the broader implications of these regulatory measures for everyday investors, particularly those using platforms like Robinhood (NASDAQ:HOOD).
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Gensler advised caution, reminding viewers that many crypto tokens might be considered securities under laws as interpreted by the U.S. Supreme Court, thus requiring proper disclosures which are currently lacking.
A focal point of the crypto discussion centered on whether Ethereum could be classified as a commodity or a security, which would significantly impact the potential for an Ethereum (CRYPTO: ETH)-based ETF.
Gensler did not provide a definitive answer but reiterated his commitment to investor protection, “The fundamental question is how do we ensure that the American investor is protected?”
What’s Next: This ongoing regulatory focus is timely as the financial community looks forward to Benzinga’s Future of Digital Assets event on Nov. 19.
The event is set to delve into these very issues, exploring the impact of regulatory decisions on the future landscape of digital assets.
Insights from leaders like Gensler will be crucial for attendees seeking to navigate the complexities of investing in cryptocurrencies amid evolving regulatory frameworks.
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