The SEC will tackle bad actors in crypto and needs to be prepared to fight cases against them, Chair Gensler said

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Gary Gensler is the new head of the Securities and Exchange Commission.

  • SEC Chairman Gary Gensler said that the SEC and FINRA have to be prepared to fight crypto cases.
  • At the annual FINRA conference, Gensler said tighter regulations would help protect investors.
  • Earlier this year, SEC “crypto mom” Hester Peirce presented a safe-harbor policy to ease regulatory pressures on crypto firms.
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The Securities and Exchange Commission will tackle bad actors in crypto and has to be prepared to make cases against them to protect investors, chairman Gary Gensler said at the annual FINRA conference on Thursday.

“The SEC and FINRA should be ready to bring cases involving issues such as crypto, cyber, and fintech.”, Gensler said in his remarks at the conference, indicating that the SEC would crack down on misconduct in the crypto industry.

At the end of 2020, the SEC sued Ripple, a global payments firm that works with blockchain technology, and two of its executives. The SEC said they had raised $1.3 billion by selling the cryptocurrency XRP as an unregistered securities offering. The case is still ongoing and the company’s management has repeatedly denied any wrongdoing.

“We need to do whatever we can to ensure that bad actors aren’t playing with working families’ savings and that the rules are enforced aggressively and consistently,” Gensler said.

He reiterated the SEC would go after misconduct in all areas of the financial system. This could include “deceptive conduct by private funds, offering or accounting frauds, insider trading, market manipulation, failures to act in retail customers’ best interests, reporting violations, best execution and fiduciary violations”, according to the SEC chairman.

Alongside equities markets, climate change, market transparency and human capital, crypto and the gamification of investing – which is often associated with the rise in retail and crypto investing during the pandemic – were areas that Gensler would seek to address, he said.

Regulations and their enforcement are key in achieving the SEC’s mission of encouraging the creation of capital, ensuring investors’ safety and maintaining “fair, orderly, and efficient markets,” Gensler said. “We need rules of the road and a cop on the beat,” he continued.

Rules are there for a reason and bending them was not in the interest of consumers and could cause more harm than good, Gensler told the audience.

The SEC is considering regulatory approaches towards crypto, amongst them the safe-harbor policy proposed by crypto-friendly SEC commissioner Hester Peirce, nicknamed ‘crypto-mom’. Her policy would give crypto asset and fund issuers a three-year grace period in which crypto tokens would not be classified as securities.

In March, Peirce said she hoped crypto regulation would progress in 2021, as regulatory bodies were too focused on the illicit activities linked to crypto technology, rather than the benefits and she hoped to collaborate with then newly installed chairman Gensler on this.

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Bitcoin falls 4% after Biden nominee Gary Gensler says SEC will seek to eliminate fraud and manipulation in crypto markets

Gary Gensler
  • Bitcoin fell as much as 4% on Tuesday after SEC Chairman nominee Gary Gensler testified that he would seek to eliminate fraud and manipulation from crypto markets.
  • Gensler said that the investor protections the SEC seeks to enforce should ensure that crypto markets are “free of fraud and manipulation.”
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Bitcoin shed as much as 4% on Tuesday following Senate testimony from President Joe Biden’s nominee for Chairman of the Securities and Exchange Commission, Gary Gensler.

Gensler said that the SEC would seek to enforce investor protections in the crypto market, including ensuring that the custody of digital assets are safe and seeking to eliminate fraud and manipulation from cryptocurrency markets.

The SEC must ensure that crypto markets “are free of fraud and manipulation, and I think that’s the greater challenge, frankly, because some markets, usually operating overseas, have been rife with fraud,” Gensler said.

Bitcoin traded just below $50,000 Tuesday morning, before falling to $47,190 as of 2:15 p.m. Gensler has been viewed as an advocate for cryptocurrencies, given his past work and teachings on the subject at MIT. 

Despite the decline on Tuesday, bitcoin is still up more than 60% year-to-date.

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SEC chief Jay Clayton says he is nervously eyeing retail-driven euphoria in the stock market

FILE PHOTO: Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, speaks at the Economic Club of New York luncheon in New York City, New York, U.S.,September 9, 2019. REUTERS/Shannon Stapleton
FILE PHOTO: Jay Clayton, Chairman of the U.S. Securities and Exchange Commission, speaks at the Economic Club of New York luncheon in New York City

  • Chairman of the Securities and Exchange Commission Jay Clayton told CNBC on Thursday he’s concerned about stock market euphoria stemming from retail investors. 
  •  “When stocks run away… we do get concerned because it is a situation where professional investors understand this, I do worry that retail investors do not understand that trees don’t grow to the sky,” Clayton added. 
  • His concerns come as all three major indexes hovered around record highs on Friday.
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Chairman of the Securities and Exchange Commission Jay Clayton told CNBC on Thursday he’s concerned about stock market euphoria that’s stemming from retail investors.

“We are in a situation where with mobile communications, access, and the like, there is a new paradigm. There are more retail investors participating in the market than ever before,” Clayton said.

“One thing we don’t regulate directly…is euphoria and we’re seeing some euphoria here,” he added. 

His concerns echo those of Goldman Sachs CEO David Solomon, who said earlier this week he’s also worried about retail investors driving the market to dizzying new heights. Both pointed to the hot IPO market. Airbnb, for example, leaped 115% on its first day of trading. On Friday, all three major indices hit all-time highs.

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“When stocks run away… we do get concerned because it is a situation where professional investors understand this. I do worry that retail investors do not understand that trees don’t grow to the sky,” Clayton added.

His interview comes as the SEC charged Robinhood with misleading customers on the revenue from trades resulting in a $65 million settlement, as well as a complaint from the Massachusetts securities regulator stating that the trading app encouraged inexperienced investors to execute frequent trades.  

 

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