SEC’s Gensler says crypto investors need more protection

Aug 3, 2021, 10:51 AM | Updated: Aug 4, 2021, 6:48 am

SILVER SPRING, Md. (AP) — The chairman of the Securities and Exchange Commission said that investors need more protection in the cryptocurrency market, which he said is “rife with fraud, scams and abuse.”

Gary Gensler, appointed by President Joe Biden to lead the body that regulates securities markets, listed several areas where crypto needed to be reigned in or regulated, particularly with regard to money laundering, sanctions, tax collection and extortion via ransomware.

“Right now, we just don’t have enough investor protection in crypto,” Gensler said in remarks to the Aspen Institute’s forum on security, “Frankly, at this time, it’s more like the Wild West.”

Digital currencies, like Bitcoin, have been left largely unregulated by major governments up to this point. In June, China ordered cryptocurrency mining operations shut down and banks started refusing to help customers with Bitcoin transactions. Although the SEC has brought and won dozens of cases against fraudsters, Gensler said the agency needs more authority from Congress — and more resources — to regulate the crypto markets.

Gensler has been viewed as receptive toward cryptocurrency and other new financial technologies after a stint as a professor at MIT, where he focused his research and teaching on public policy as well as digital currencies and blockchain, the global running ledgers of digital currency transactions.

Beyond the problems, Gensler said innovation in digital currencies “has been and could continue to be a catalyst for change in the fields of finance and money.”

A Goldman Sachs employee for 20 years, Gensler surprised many with his toughness as a regulator at the Commodity Futures Trading Commission during the Obama administration.

Gensler opened his remarks by saying he was not speaking on behalf of the SEC or its staff, but that he personally believes that regulation of cryptocurrencies would fall under his agency’s purview.

Currencies such as the dollar or euro fulfill several key functions, Gensler said; they are a store of value, a unit of account and medium of exchange. By contrast, Bitcoin and other cryptocurrencies are for now mostly “highly speculative” investments.

When Congress defined what a security was in the 1930s, Gensler said, one of those definitions was as an investment contract — when “a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or a third party.”

That definition, which Gensler says should apply to cryptocurrency, has been tested and reaffirmed by the Supreme Court. Gensler noted that his predecessor at the SEC, Jay Clayton, testified in 2018 that he believed ICOs, or initial coin offerings, were securities and that “we have jurisdiction, and our federal securities laws apply.”

Gensler said many crypto tokens are unregistered securities and don’t come with market oversight or proper disclosures to educate investors. That leaves prices open to manipulation and investors unprotected, he said.

“These products are subject to the securities laws and must work within our securities regime,” Gensler said. “If we don’t address these issues, I worry a lot of people will be hurt.”

The combined market capitalization of all cryptocurrencies is currently more than $1.5 trillion.

Tuesday’s event marked the first time the non-profit Aspen Institute included a discussion about cryptocurrency in the forum on national security.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

Latvian Prime Minister and Head of board of leading political party Jauna Vienotiba (New Unity) Kri...
Associated Press

Latvian premier’s party emerges on top in general election

HELSINKI (AP) — Prime Minister Krisjanis Karins’ ruling center-right party won the most votes in Latvia’s general election, centrist parties were runners-up and pro-Moscow parties crashed in a vote that was shaped by neighboring Russia’s war in Ukraine and divisions among the Baltic country’s sizable ethnic Russian minority. With more than 97% of the votes […]
2 hours ago
Ukrainian servicemen drive a tank on the way to Siversk, Donetsk region, Ukraine, Saturday, Oct. 1,...
Associated Press

Ukraine presses counteroffensive after Russian setback

KYIV, Ukraine (AP) — Russia attacked the Ukrainian president’s hometown with suicide drones on Sunday, and Ukraine pushed ahead with its counteroffensive after taking back control of a strategic eastern city. Russia’s loss of Lyman, which it had been using as a transport and logistics hub, is a new blow to the Kremlin as it […]
2 hours ago
Buddhist monks perform rituals during the funeral of famed American extreme skier Hilaree Nelson in...
Associated Press

Famed US extreme skier gets traditional Nepalese funeral

KATHMANDU, Nepal (AP) — A famed extreme skier from the United States who was killed after falling from one of the world’s tallest mountains was on Sunday given a traditional funeral at a Sherpa cremation ground as Buddhist monks officiated over a ceremony attended by family, friends and government officials. Hilaree Nelson, 49, fell off […]
2 hours ago
Pasika Bagerimana stands outside a temporary shelter she shares with others who fled fighting, in N...
Associated Press

Rebel violence in eastern Congo causes hunger to soar

NYIRAGONGO, Congo (AP) — The last thing Pasika Bagerimana remembers before her sons died were their cries of hunger. But the 25-year-old mother had nothing to feed them. “‘Mom, I need to eat. Can you give me food?'” they pleaded with her. Daniel, 2, and Bonane, 5, died just weeks apart in July after fleeing […]
2 hours ago
Dmytro, one of three men working a 12-hour night shift, loads coal into a boiler at a bakery in Kos...
Associated Press

AP PHOTOS: Ukraine bakery supplies bread for the front lines

KOSTIANTYNIVKA, Ukraine (AP) — Seemingly abandoned during the day, the damaged factory building in eastern Ukraine comes to life at night, when the smell of fresh bread emanates from its broken windows. It’s one of two large-scale bakeries left in operation in the Ukrainian-held part of the Donetsk region, most of which is under Russian […]
1 day ago
FILE- A national library employee shows the gold Nobel Prize medal awarded to the late novelist Gab...
Associated Press

Nobel season is here: 5 things to know about the prizes

COPENHAGEN, Denmark (AP) — The beginning of October means Nobel Prize season. Six days, six prizes, new faces from around the globe added to the world’s most elite roster of scientists, writers, economists and human rights leaders. This year’s Nobel season kicks off Monday with the medicine award, followed by daily announcements: physics on Tuesday, […]
1 day ago

Sponsored Articles

...
Quantum Fiber

How high-speed fiber internet can improve everyday life

Quantum Fiber supplies unlimited data with speeds up to 940 mbps, enough to share 4K videos with coworkers 20 times faster than a cable.
...
Sanderson Ford

Don’t let rising fuel prices stop you from traveling Arizona this summer

There's no better time to get out on the open road and see what the beautiful state of Arizona has to offer. But if the cost of gas is putting a cloud over your summer vacation plans, let Sanderson Ford help with their wide-range selection of electric vehicles.
(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
SEC’s Gensler says crypto investors need more protection