- SEC Chair Gary Gensler said crypto will only take off if there are clear rules around the market.
- He said investors need more protection from fraud and suggested he wants to focus on crypto exchanges.
- Gensler said the SEC is looking at at least seven crypto areas including DeFi, stablecoins and ETFs.
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New Securities and Exchange Commission chief Gary Gensler has said crypto can only become mainstream if regulators lay out clear rules – as he sets his sights on stricter regulation for the $1.6 trillion digital asset market.
In a wide-ranging interview with Bloomberg, Gensler said he believes investors need more protection against fraud. He also said the SEC is looking at at least seven areas of the market, including decentralized finance and stablecoins. And he again suggested he wants to focus on crypto exchanges in particular.
Gensler, who taught a cryptocurrency course at MIT, said he’s neutral or even intrigued by the technology, but is not neutral about investor protection. “We have a role as a nation to protect those investors against fraud,” he said in the interview, published Tuesday.
Gensler said he believes digital assets can boost economic progress and become more widely used, according to Bloomberg.
But he said: “It’s only with bringing things inside – and sort of clearly within our public policy goals – that a technology has a chance of broader adoption.” Gensler said it was a bit like driving, which only took off when the government laid out clear rules of the road.
The former Goldman Sachs partner said the SEC is doing lots of work on digital assets and looking at at least seven key issues: initial coin offerings, trading venues, lending platforms, decentralized finance or DeFi, stablecoins, custody, and exchange-traded funds.
Gensler told Bloomberg he thinks regulating crypto exchanges could be the best way to gain more control over cryptocurrencies. In May, he urged Congress to work on legislation to give the SEC more oversight of trading venues.
A key issue when it comes to crypto regulation is whose jurisdiction the sector falls under. Regulators broadly think bitcoin is more like a commodity than a security, likely putting the biggest cryptocurrency outside the SEC’s remit.
But Gensler said DeFi lending could come under SEC oversight as it often offers a specific interest-rate return. He also said platforms that pool digital assets could be akin to mutual funds, meaning the SEC could regulate them.
However, Gensler did not lay out when the SEC will take further action on crypto, saying other big issues such as the GameStop saga were occupying the markets watchdog. He also declined to say whether the SEC would approve a bitcoin ETF.