SEC will use all available tools to crack down on crypto firms that don’t abide by its rules, says CEO Gensler – Bitcoin News Regulation
US Securities and Exchange Commission (SEC) Chairman Gary Gensler has revealed that the regulator will use all available tools to bring crypto platforms into line with its rules. In addition, the Chairman of the Securities and Exchange Commission said: “Proof of reserves is not a complete accounting of the company’s assets and liabilities, and does not meet the separation of customer funds under securities laws.”
SEC President Gensler on crypto regulation
SEC Chairman Gary Gensler stressed the importance of bringing crypto platforms into compliance after the securities regulator filed charges against former Alameda Research CEO Caroline Ellison and former FTX CEO Gary Wang for their roles in defrauding equity investors. The SEC chairman tweeted Wednesday:
Until crypto platforms comply with time-tested securities laws, risks to investors will continue to be exposed. It continues to be a priority for the SEC to use all the tools at our disposal to bring the industry into compliance.
In an interview with Bloomberg on Thursday, Gensler noted that the Securities and Exchange Commission (SEC) is just beginning its crackdown on crypto companies that don’t abide by its rules.
Gensler explained that “the runway is getting shorter” for cryptocurrency firms to enter and register with the SEC, emphasizing: “Casinos in the Wild West are non-compliant brokers.”
The SEC chairman also commented on Proof of Reserves (POR) reports that a number of cryptocurrency exchanges, including Binance, are using to prove they have enough funds to process customer withdrawals. Noting that this practice falls short of the disclosures needed to protect investors, Gensler explained:
Proof of reserves does not constitute a complete accounting of the company’s assets and liabilities, and does not meet the segregation of clients’ funds under securities laws.
Gensler suggested that crypto companies should “give customers confidence that their cryptocurrency is really out there” by “complying with time-tested custodianship rules, and separating customer money rules from accounting rules.” The Securities and Exchange Commission (SEC) is focused on keeping the financial records of crypto companies.
The securities watchdog and its chair have been criticized by some for their enforcement-centric approach to regulating the cryptocurrency industry. They were also scrutinized in the collapse of cryptocurrency exchange FTX since Gensler and SEC staff met with former FTX CEO Sam Bankman-Fried (SBF) several times.
Congressman Tom Emmer (R-MN) tweeted Thursday: “Gary Gensler and the SEC have had more meetings with the SBF and FTX/IEX than anyone else in the crypto space, purporting to establish a special regulatory framework designed to benefit FTX alone.” The legislator also wrote:
Making regulatory deals behind the scenes with bad actors is not a tool in the SEC’s toolbox.
Congressman Emmer said last month that the fallout from FTX is not a crypto failure but the SEC failure of Gensler. The Minnesota lawmaker called on Gensler to testify before Congress about the cost of his regulatory failures.
Last week, the head of the SEC stressed the importance of regulating digital currency issuers and brokers. He said earlier that most tokens are securities but the crypto field is highly incompatible. The securities regulator recently published its strategic plan for the next four years, and crypto is among its top priorities. Gensler said in November that the SEC’s enforcement division remains focused on cryptocurrencies.
What do you think of SEC Chairman Gary Gensler’s remarks regarding cryptocurrency regulation? Let us know in the comments section below.
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