Gary Gensler, the chair of the US Securities and Exchange Commission (SEC), has requested the agency to get crypto platforms registered and subjected to the same regulatory framework as exchanges. He said SEC’s protections that apply to investors of traditional assets should extend to the crypto market.
Gensler wants the agency to work towards addressing regulation clarity in the crypto space. It can do so by considering how to register platforms, where the trading of securities and non-securities is intertwined, as well as giving retail investors the same protection.
The chair highlighted the need for investor and market protection as crypto offers new ways for entrepreneurs to raise capital and for investors to trade. Gensler said the SEC already has robust ways to protect investors trading on platforms. The agency also safeguards investors when entrepreneurs want to raise money from the public. The chair pointed out that the same protections need to be applied in the crypto markets.
As such, the SEC is exploring whether it would be appropriate to segregate out custody. It is looking at seemingly separating registration regimes for platforms offering custody and those that do not. Gensler believes there is no reason to treat the crypto market differently just because the technology it uses is different. Over the years, he has repeatedly called for crypto projects with securities to register to ensure investor protection.
However, many crypto firms have criticized the lack of regulatory clarity in the US. A similar agency, the Commodity Futures Trading Commission (CFTC) also looks into regulation. It regulates commodity futures. With SEC and CFTC working together, it would probably eliminate some confusion by giving exchanges a single regulatory body to turn to.