Crypto Market Fraught with Noncompliance, Says SEC Chairman Gary Gensler

Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, expressed his worries on the cryptocurrency market in a recent interview with CNBC, characterizing it as a haven for illegal activity and noncompliance. In contrast to the cryptocurrency industry’s relatively tiny scale within the larger U.S. financial system, Gensler emphasized the disproportionate number of scams and frauds inside it.

Gensler emphasized the scale of the SEC’s jurisdiction, overseeing a colossal $110 trillion capital market, with crypto constituting only a fraction of it. However, despite its minor share, crypto stands out due to its disproportionate involvement in fraudulent activities. Gensler remarked, “Crypto is a small piece of our overall markets. But it’s an outsized piece of the scams and frauds and problems in our markets because … much of this field is noncompliant with the protections of our securities laws.”

Regulatory Oversight and Investor Protection

The SEC’s scrutiny extends to crypto platforms like Robinhood Markets, which recently received a Wells notice over its crypto operations. Gensler underscored the classification of many tokens as securities under existing U.S. law, necessitating compliance with disclosure requirements. He questioned the lack of transparency in crypto markets, especially during earnings seasons, when traditional assets are subject to rigorous disclosure standards.

Gensler pointed out the disparity in disclosure practices between traditional financial assets and crypto tokens, stating, “We’re also paid to be merit-neutral. Investors get to decide as long as they get the full, fair, complete and truthful … information. They’re not getting that in crypto.”

Gensler reiterated the SEC’s commitment to upholding investor protection and ensuring market integrity. He stressed the need for regulatory oversight and adherence to existing securities laws within the crypto space. Gensler’s stance underscores the importance of transparency and compliance in fostering trust and stability within the evolving landscape of digital assets.