Gary Gensler, the Chairperson of the United States Securities and Exchange Commission released a video message on crypto platforms and securities laws. On 3rd May, during his office hours, he released a detailed viewpoint on why intermediaries for investment contracts are required to comply with securities laws and register with the U.S. Securities and Exchange Commission (SEC).
According to reports, in his statement, Gensler mentioned that the United States Securities and Exchange Commission’s definition of securities includes more than 30 items. These items are bonds, stocks, notes, and especially investment contracts. Also, he defined investment contracts and said, they are those investments in which a person invests for seeking some profits in the future and they derive profits from the efforts of others. Additionally, the Chairman of the SEC said that the brokers, exchanges, dealers, or clearing houses need to comply with laws and register themselves.
Also, as one of the debatable topics in the United States in recent years, cryptocurrency regulations have been discussed by Gensler in his video message. In his statement, he said that some cryptocurrency platforms are pretending like a “goldfish” by not following the existing laws. Additionally, those crypto platforms that don’t follow the regulations mean that the investments of customers are at a high level of risk.
There’s so much chaos in the US after the collapse of one of the largest cryptocurrency exchanges, FTX, last year. Lawmakers like Elizabeth Warren have been very vocal against the outright ban on exchange because of vulnerability involvement. And now, the Chairman of the SEC also warned customers to look twice before investing in crypto platforms.
According to reports, those crypto platforms combine activities like broker-dealer and clearinghouse under the same roof and when these platforms don’t register these functions to the authorities means that your investment is at risk. The platform combines the activities like broker-dealer and other functions that create conflicts of interest and further, this undermines the investor’s protection.
However, his message on crypto regulations added that the crypto market suffers not only because there are some defects available in the system but because of manipulation by crypto platforms. According to Gensler, one of the recent incidents came to light where one Crypto platform executive willingly omitted some words from the document to mislead the authorities.
By hiding some words from the web pages these platforms try to project that they don’t come under investment contracts so they can easily perform business without any regulations. The comments of Gary Gensler seem very important in the current scenario where the world is facing issues in dealing with crypto regulation.
