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SEC Chair Issues Dire Warning For Crypto Exchanges - Bitcoinist

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Gary Gensler, chairman of the U.S. Securities and Exchange Commission (SEC), continues to crack down on the crypto industry. In an investor advisory committee, the SEC Chair declared that lending platforms and crypto exchanges operate “investment advisers can’t rely on them as qualified custodians.” Gensler added:

Just because a crypto trading platform claims to be a qualified custodian doesn’t mean that it is. When these platforms fail- something we’ve seen time and again — investors’ assets often have become property of the failed company, leaving investors in line at the bankruptcy court.

For Gensler, advisers should comply with the current custody rule, which requires that investors’ funds and securities be held with “qualified custodians.” These qualified custodians, which Gensler identifies, are money managers on behalf of their clients regulated by the SEC under the U.S. Investment Advisers Act of 1940. 

This follows the SEC’s new proposed federal regulations that would expand custody rules to include cryptocurrencies and require exchanges to register to hold client assets. The SEC’s filing claims:

(…) we are redesignating the custody rule as new rule 223-1 under the Advisers Act (the “safeguarding rule” or the “proposed rule”) and proposing a number of amendments to strengthen its protections.30 The proposal is designed to recognize the evolution in products and services investment advisers offer to their clients and to strengthen and clarify existing custody protections.

Gensler also mentioned to the advisory committee that predictive data technologies could create “inherent conflicts of interest” related to advisers’ demands on their clients. Gensler said he’d asked the agency’s staff to recommend addressing those issues.

The SEC Continues Its Regulatory Enforcement Against The Crypto Industry

The recent statements made by the Chairman of the Securities and Exchange Commission are in deep connection with the recent actions carried out by the regulatory agency.

Recently, the SEC charged Singapore-based Terraform Kabs and Do Hyeong Kwon with “orchestrating a multi-billion dollar” crypto asset “securities fraud,” claiming they were involved in an algorithmic stablecoin and other crypto asset securities. Gensler said:

We allege that Terraform and Do Kwon failed to provide the public with full, fair, and truthful disclosure as required for a host of crypto asset securities, most notably for LUNA and Terra USD.

The SEC has recently cracked down on crypto companies that offer “securities without registration.” The regulatory crackdown has left investors with many questions and unclear rules. 

To this end, Coinbase has also launched a campaign called “Crypto435” to listen to the concerns and requests of US-based customers affected by the SEC’s action. The campaign will be conducted in all 435 congressional districts in the US.

Crypto
The total crypto market continues its range on the daily chart. Source: TOTAL TradingView.com

The crypto market capitalization stands at $1.022 trillion as of press time, down -1.79% over the past 24 hours and down -45% over the past year. Bitcoin’s market cap has remained at $450 billion, representing a dominance of 40.45%. 

On the other hand, stablecoin’s market cap is at $136 billion, representing a 12% share of the crypto ecosystem’s total market cap.

Featured Image from Unsplash, chart from TradingView.com

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