SEC Chair Gary Gensler Warns Crypto Exchanges, Says More Pain Left In Crypto

On Wednesday, May 18, Gary Gensler, the chief of U.S. Securities and Exchange Commission (SEC) warned crypto exchanges with major actions.

Testifying before the congressional committee, Gensler said: “The crypto exchanges should come in and register, or, frankly, we’re going to continue to bring, use what Congress has given us, in our enforcement and examination functions.”

The recent collapse of the Terra ecosystem has put all regulatory bodies worldwide on an alert mode. South Korea has already started investigating its local exchanges. Regulators across the world could soon follow the move.

Genlser’s recent statement came while answering Rep. Steve Womack (R-AR), who expressed his displeasure over SEC’s delay and failure in creating clear regulations for cryptocurrencies.

In his analogy to football, Womack cautioned, “Before an official can throw a flag—do an enforcement action—you gotta know the rules”. So far, the U.S. SEC has brought more than 80 enforcement actions against crypto service providers.

Gensler argued that all of these actions have been under the purview of the securities regulator. “I think the rules are actually quite clear that if you’re raising money from the public, and the public anticipates a profit based on the efforts of that sponsor, that’s a security,” said Gensler.

In the past, Genlser asked for greater regulatory oversight in the crypto space. He also said that the SEC is willing to work with the U.S. Congress to make clear draft rules for crypto.

But the SEC still needs to take a clear stand on clarifying which crypto assets serve as securities and which can classify as a commodity. During the Congressional hearing on Wednesday, Gensler referred to Bitcoin as a commodity. “Bitcoin, maybe that’s a commodity token.”

To solve this matter, Gensler said that he is willing to have a regulation process overseen by both the SEC and the Commodities Future Trading Commission (CFTC). The two bodies working together will clearly help them classify crypto as either a security or a commodity.

On Wednesday, Gensler also said that more resources are required to adequately regulate crypto. Commenting on this month’s market crash, Gensler said that there’s still more pain left in crypto. He said: “I think a lot of these tokens will fail. I fear that in crypto… there’s going to be a lot of people hurt, and that will undermine some of the confidence in markets and trust in markets writ large.”