Securities and Exchange Commission Chairman Gary Gensler reiterated his call for crypto exchanges to register with the agency, warning that they would be subject to enforcement action if they failed to do so, during an interview with The Washington Post Live Tuesday.
There are trading platforms where you can buy and sell them [digital tokens], the lending platforms where you can earn a return on these tokens…and it is very likely that they hold securities on these platforms” that the SEC is committed to regulating, Gensler said.
He added that the agency will continue to file enforcement lawsuits against crypto exchanges that refuse to register with the regulator, but he fears that the lack of oversight could ultimately harm US investors. “I’m really afraid…there will be a problem with lending platforms or trading platforms, and frankly, when that happens, a lot of people will be hurt.”
Gensler also influenced the debate over the regulation of stablecoins, or a type of digital currency that attempts to maintain a value peg to the US dollar (DXY),
These instruments, including Tether USDTUSD,
Facilitate trading between popular cryptocurrencies such as Bitcoin BTCUSD,
and ether ETHUSD,
In July, Treasury Secretary Janet Yellen called on the President’s Working Group on Financial Markets to address the threat posed by stablecoins to financial stability, stressing “the need to act quickly to ensure an appropriate regulatory framework.”
Gensler compared the stablecoins to the private banknotes that dominated the American economy in the mid-19th century, before the establishment of a national banking system during the Civil War. Gensler said the so-called “wild” banking age “had a lot of problems and costs,” which ultimately necessitated the creation of the Federal Reserve and the public money it provides to Americans today.
“Public money has a certain place around the world,” Gensler said. Private money usually doesn’t last very long, so I don’t think there is a long-term viability for five or 6000 forms of private money. History tells us otherwise.”
Gensler called on Congress to work with the country’s financial regulators to craft an appropriate regulatory regime for stablecoins. The Treasury is expected to release a report with recommendations on regulating stablecoins in the coming weeks.