SEC Chairman Releases Video Outlining Plan To Regulate Cryptocurrency Trading Platforms

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has released a video explaining how the agency plans to regulate crypto exchanges. “I have directed our staff to work directly with the platforms to get them registered and regulated,” the SEC chief revealed.

Video of SEC Chairman Gary Gensler on Regulation of Crypto Exchanges

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler released a video on Thursday explaining how the securities watchdog plans to regulate crypto exchanges and protect investors.

Gensler explained in the video the similarities and differences between crypto trading platforms and traditional exchanges like the New York Stock Exchange (NYSE). “When you trade on the stock exchange, you have certain protections,” he began, adding that investors are “protected against fraud, manipulation, leakage, etc.”


Noting that crypto platforms serve “millions, sometimes tens of millions” of retail clients who buy and sell crypto assets directly without going through a broker, the SEC Chairman detailed: “With so many retail clients trade on crypto platforms, we need to ensure that these platforms offer similar protections” to traditional security platforms. He added:

So I have instructed our staff to work directly with the platforms to get them registered and regulated to ensure that these crypto tokens also arrive and register as securities where appropriate.

“Imagine handing over all your shares to the New York Stock Exchange, it would never fly,” he noted, reiterating: “So I asked the staff how to work with the platforms to best ensure the protection of your assets”.

Gensler went on to discuss another risk factor inherent in crypto exchanges. “Unlike traditional stock exchanges, crypto trading platforms can also act as market makers,” he described. “When you sell your tokens, one of the platforms can actually buy the other side,” the SEC Chairman pointed out, clarifying:

Exchanges do not do this, they are not their own market makers, because it creates inherent conflicts of interest.

“So again, I have asked staff to consider whether it would be appropriate to separate market making functions on these crypto platforms,” he said.

In conclusion, the SEC Chairman pointed out, “There is no reason to treat the crypto market differently just because a different technology is used. That would be like saying that electric car drivers don’t need seatbelts because they don’t use gasoline.

He also tweeted on Thursday: “We have rules in our capital markets to preserve market integrity and protect against fraud and manipulation. If a company builds a crypto market that protects investors and meets the standards of our market regulations, people are more likely to have greater trust in that market.

Gensler’s video was criticized on Twitter. Some people accuse Gensler of spending time and resources promoting themselves instead of doing their job regulating the crypto industry. Others have criticized the SEC for using an enforcement-centric approach to regulating crypto assets.

Congressman Bill Huizenga (R-MI) tweeted at Gensler, “The SEC should stop using regulation by enforcement to bring ‘clarity’ to the market,” stating:

No exchange wants to “come in and list” without knowing what these market regulations are.

Last week, the regulator indicted a former Coinbase employee in an insider trading case, naming nine crypto tokens as securities in the process.

What do you think of SEC Chairman Gary Gensler’s video on the regulation of crypto exchanges? Let us know in the comments section below.

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Kevin Helms

An economics student from Austria, Kevin discovered Bitcoin in 2011 and has been an evangelist ever since. His interests include Bitcoin security, open source systems, network effects, and the intersection between economics and cryptography.

Image credits: Shutterstock, Pixabay, Wiki Commons

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