US SEC Chair Calls for More Disclosure on Crypto

Gary Gensler, chair of the U.S. Securities and Exchange Commission (SEC) has classified crypto assets as “highly speculative,” saying investors need more protections, lest they lose trust in the markets, Reuters reported Monday (May 16).

Gensler said those who buy crypto don’t usually get the disclosures that come with asset purchases of other kinds, including things like whether the trading platform is trading against them, or whether they own the assets they store in digital wallets.

He said there’s a “basic bargain” where the investing public can make choices on risks. However, there is also supposed to be “full and fair disclosure” and that people aren’t supposed to lie, he said, speaking at the Financial Industry Regulatory Authority’s annual conference in Washington.

Gensler said the idea that crypto markets are decentralized is not usually true — instead, the bulk of the activity comes on just a few trading platforms. He said those platforms need to work with the SEC.

Gensler added that the SEC would be “a cop on the beat” and look into things like anti-fraud measures, anti-manipulation and making sure there’s a real order book, among other things.

See also: SEC's Peirce Anticipates Stablecoin Regulations in Wake of Terra Tumble

This comes in the aftermath of the collapse of TerraUSD, or UST, the stablecoin that lost the one-to-one dollar peg — because of that, crypto as a whole saw mass falls in valuation. Bitcoin, for example, lost the gains it had over the weekend and was trading under $30,000.

Hester Peirce, a SEC commissioner, said there might be regulations imminent for stablecoins as the fallout continues over UST.

The markets had an overall value of $1 trillion last week as the events surrounding UST were going on.

In Peirce’s estimation, the SEC might capture digital currencies and the platforms trading them under various new rules. This comes in the wake of a lot of talk about digital asset regulation. Treasury Secretary Janet Yellen previously said the depressed crypto markets would need an “appropriate framework.”