The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has warned that a lot of crypto tokens will fail and many crypto investors will get hurt following the collapse of terra (LUNA) and stablecoin terrausd (UST).
SEC Chair Gensler’s Warning After LUNA and UST Collapse
U.S. Securities and Exchange Commission Chairman Gary Gensler expressed his concerns Wednesday that more crypto investors will be harmed following the implosion of cryptocurrency terra (LUNA) and stablecoin terrausd (UST).
He told reporters after a House Appropriations Committee panel hearing:
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.
Last week, algorithmic stablecoin UST lost its peg to the U.S. dollar, sending its price and the price of cryptocurrency LUNA into free fall.
The collapse of the two cryptocurrencies has caused grave concerns among regulators and lawmakers. U.S. Treasury Secretary Janet Yellen cited the collapse of UST while calling for increased regulations of stablecoins last week.
Gensler said Wednesday that SEC-registered asset managers do not have significant exposure to crypto assets. However, he noted that his agency has less visibility into private funds, particularly family offices. The SEC chief believes that most cryptocurrencies out there are securities. He has been urging cryptocurrency trading platforms to approach the SEC and register.
“There is a path forward that we’re talking with these exchanges about to do both: to get the platforms registered and have a pathway for the tokens as well,” he said, noting that the agency has the authority to create exemptions where necessary. He added:
They should move towards getting registered or, you know, we’re going to be the cop on the beat, and we’re going to bring the enforcement actions.
However, Gensler has been heavily criticized by some for taking an enforcement-centric approach to regulating the crypto sector. He announced earlier this month that the SEC plans to nearly double the size of its Enforcement Division’s crypto unit.
The SEC chairman indicated Wednesday that his agency does not have enough resources to adequately police financial markets. He stressed:
We’re really outpersonned.
Commenting on the SEC lacking resources, U.S. Representative Tom Emmer tweeted to Gensler:
You put all of the SEC’s taxpayer funded resources into crypto crackdowns. Now you don’t have the funds to do your actual job so you’re coming to Congress for more? You’ve got to be kidding me.
What do you think about Gary Gensler’s comments and his crypto regulatory approach? Let us know in the comments section below.