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Crypto trading, lending platforms should offer similar customer protections as stock exchanges, warns SEC chairman Gary Gensler – News Opener

Crypto trading and lending platforms should offer similar customer protections as stock exchanges provide, warned Gary Gensler, Chairman of the U.S. Securities and Exchange Commission.

Gensler made the comments after several major crypto companies collapsed as digital assets price crashed. Earlier this month, digital asset broker Voyager Digital and lender Celsius consecutively filed for bankruptcy protection in the U.S., leaving millions of users unable to access their funds on the platforms.

“I’ve asked our staff to work directly with [crypto] platforms to get them registered and regulated much like securities exchanges, and to ensure that those crypto tokens come in as well and register where appropriate, as securities,” Gensler said in a video of the “Office Hour” series on Thursday. 

What cryptocurrencies qualify as securities have long been debated as a key issue around digital asset regulation. Most recently, Coinbase Global
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is reportedly facing an investigation into whether it allowed investors to trade digital assets that should have been registered as securities, according to a Bloomberg article. 

On July 21, the SEC announced insider-trading charges against a former Coinbase product manager, for allegedly tipping his brother and a friend to planned asset listings on the exchange before they were publicly disclosed. Though the agency didn’t accuse Coinbase of any wrongdoings, it said nine of the 25 crypto assets involved in the case were securities, while seven of the nine tokens were listed on Coinbase.

Read: Coinbase, Flexa dispute SEC’s claims that these 9 cryptocurrencies are securities 

By investing with crypto platforms, investors are also “literally handing over the keys to your crypto,” Gensler said. “Just imagine this, imagine handing over all of your stock to the New York Stock Exchange. That would never fly.”

In some circumstances, crypto trading platforms may also act as market makers, unlike traditional securities exchanges, Gensler said. “Stock exchanges don’t do this, they don’t serve as their own market makers because that creates inherent conflicts of interest. Thus again, I’ve asked staff to consider whether it would be appropriate to segregate out the market making functions on these crypto platforms,” according to Gensler.

Hear from Mike Novogratz at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The Galaxy Digital CEO has ideas about navigating the crypto winter.

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