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SEC head Gary Gensler warns of ‘even more’ crypto regulation

In his letter to Senator Warren, the Chairman stated the US SEC needs additional authorization and resources to regulate cryptocurrency exchanges.ย 

SEC head Gary Gensler warns of ‘even more’ crypto regulation

Cover art/illustration via CryptoSlate

Senator Elizabeth Warren recently released the letter Securities and Exchange Commission (SEC) Chair Gary Gensler sent in response to her request to address the โ€œopaque and volatileโ€ crypto market and resolve whether the Congress should intervene.ย 

Determined to rein in crypto, Senator Warren wrote to the SEC Chairman last month inquiring concrete input on what authorization the agency needs to regulate cryptocurrency exchanges. Here is what he responded.

Putting spotlight on crypto trading, lending, and DeFi platformsย 

“I believe we need additional authorities to prevent transactions, products, and platforms from falling between regulatory cracks,” wrote Gensler, adding that โ€œthe legislative priority should center on crypto trading, lending, and DeFi platforms.”

โ€œWhile each tokenโ€™s legal status depends on its own facts and circumstances, the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities,” read Genslerโ€™s response, while he affirmed that the question of securities status is clear.

“Certain rules related to crypto assets are well-settled. The test to determine whether a crypto asset is a security is clear,” asserted Gensler, while pointing out the regulator will โ€œneed more resources to protect investors in this growing and volatile sector.โ€

โ€Further, while many overseas platforms state they donโ€™t allow U.S. investors, there are

allegations that some unregulated foreign exchanges facilitate trading by U.S. traders who are

using virtual private networks, or VPNs,โ€ wrote Gensler, while touching the issue of US crypto traders evading overseas exchange bans.

Another issue has to do with stablecoins

Gensler also took the opportunity to draw the Senatorโ€™s attention to the booming stablecoin

market worth $113 billion, pointing out their cardinal role in crypto trading and lending.ย 

โ€œTo trade crypto-to-crypto, usually, somebody uses stablecoins,โ€ Gensler explained, while further elaborating that โ€œin July, nearly three-quarters of trading on all crypto trading platforms occurred between a stablecoin and some other token.โ€

According to the regulator, the use of stablecoins โ€œmay facilitate those seeking to sidestep a host of public policy goals connected to the traditional banking and financial system: anti-money laundering, tax compliance, sanctions, and the like.โ€ย 

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