In a speech at the Aspen Security Forum this week, Gary Gensler, chairman of the Securities and Exchange Commission (SEC), likened the crypto markets to the Wild West in which investors were not sufficiently protected. He argued for additional congressional authorities to prevent transactions, products, and platforms from falling through “regulatory cracks.”

Why should we care?
Gensler’s remarks touched on various aspects of the crypto sector. On digital tokens, Gensler suggested many are investment contracts that should be regulated as securities. Regarding crypto trading platforms, he signaled that many don’t have appropriate investor protections. He highlighted requirements for trading platforms to register with the SEC where necessary. Gensler expressed caution around stablecoins, which he said might act as conduits to skirt anti-money laundering and tax compliance laws. Stablecoins may also be securities and fall under the purview of the SEC, he noted. Gensler didn’t say whether the regulator would approve bitcoin exchange-traded funds. In addition, DeFi (decentralized finance) lending may fall under the purview of the SEC if it offers an interest-rate return. Meanwhile, platforms that pool digital assets could be viewed as mutual funds, which would also fall under the oversight umbrella of the SEC, he noted. “Right now, large parts of the field of crypto are sitting astride of — not operating within — regulatory frameworks that protect investors and consumers, guard against illicit activity, ensure financial stability, and yes, protect national security,” Gensler said.