SEC Must Increase Cryptocurrency Oversight, Investor Advocates Say
Many cryptocurrency projects flout investor protection rules and deserve further scrutiny, a group of investor advocates, Gary Gensler, chairman of the Securities and Exchange Commission, said on Monday.
The letter, signed by the Americans for Financial Reform Education Fund, the Consumer Federation of America and others, singled out stablecoins, crypto loans and exchanges as deserving of increased attention from the SEC.
“Without significant regulatory guidance, the digital asset market was born and turned into a Wild West,” the letter said, echoing a comparison often made by Gensler. “There is an urgent need for the Commission and other federal financial regulators to enforce the law to better protect investors and improve the integrity and stability of digital asset markets.”
The letter comes as Gensler and other regulators step up their scrutiny of the crypto market, which over the past decade has grown from a little-known tech project to a multi-billion dollar industry that the researchers say. supporters, could upset traditional finance.
The SEC has already filed or threatened lawsuits against certain crypto products. Coinbase quietly dropped an interest payment plan on crypto deposits on Friday after the SEC told the company it could be sued if it goes ahead.
The US Treasury Department has focused on stablecoins and is conducting a review with other agencies that could lead to recommendations for new rules or oversight. Unlike Bitcoin, which can be priced up or down, stablecoins are priced at $ 1. To gain this support, stablecoin providers hold reserves, which companies have disclosed, including cash, commercial paper, and corporate bonds.
The advocacy group letter says these reserves resemble those held by money market funds and are vulnerable to market stress.
“Obviously, both products can create significant risk for investors and consumers,” said the letter from Tether and USD Coin, two of the largest stablecoins.
Although some lawmakers have said Congress and regulators need to better define securities rules in light of new technology, advocates have said Gensler should “vigorously enforce” existing investor protections and not create a exception for the crypto market.
Copyright 2021 Bloomberg.
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