Gary Gensler, Chairman of Securities and Exchange Commission (SEC) says that all crypto-related assets should comply with SEC Securities law. He believes that most of the tokens and initial coin offerings (ICOs) violate US security laws.
In the Aspen Security Forum on August 3, Gensler discussed the crypto’s intersection with national security. Significantly, he pointed out that investment in digital assets is a high store of value. At the same time, this investment vehicle is widespread with scams, fraud in some applications. As a result, there is no investor protection in the crypto space.
Moreover, Gensler agrees with former SEC Chairman Jay Clayton once said that “I believe every ICO I have seen is a security”. He also added that:
“In general, people who buy these tokens expect to profit, and there is a small group of entrepreneurs and technologists who are standing up and nurturing the projects. I believe we are now in a crypto market where many tokens are unregistered securities with no required disclosures or market oversight.”
According to Gensler, these tokens may manipulate investors and might lead to risk. He explains that whether it is a stock token or a stable value token, what matters is these tokens should comply with security laws. These tokens must be registered and their issuers must follow existing federal law.
As technology improves, scams and frauds have also risen equally. The crypto world has platforms where users can trade and lend their tokens. These platforms may violate security laws as well as commodities and banking laws. In order to restrict and protect investors, the regulators say that every firm should register and comply with SEC law.
Other Investment Vehicles
Gensler also speculated that the firm may step into exchange-traded funds (ETF). Over the last year, many industry participants have filed applications to launch a bitcoin ETF. Consequently, as the digital assets are advancing he constantly focused on the importance of investor protection.
Additionally, Investment vehicles with the popularity of crypto, such as mutual funds, already exist. While Gensler did not elaborate on the plans, he did stress the importance of upholding investor protections in law.
Furthermore, the authorities will go to great lengths to protect investors. They eagerly await the review of such filings by the staff, especially if they are limited to CME-traded Bitcoin futures. The final policy area is cryptocurrency asset custody. The SEC is looking for feedback on cryptocurrency custody agreements signed by brokers and institutional investors.
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