SEC Explores Corporate Segregation In Crypto Exchanges

The U.S. Securities and Exchange Commission is looking at ways to regulate cryptocurrency trading platforms that could include separating some of their operations, said regulator chairman Gary Gensler.

In a speech on Monday, Gensler said crypto trading platforms that handle more than $100 billion in trades a day differ from traditional exchanges because they do more things — like take custody of client assets and trade securities. tokens listed as “market makers”.

Citing statistics that $14 billion in client crypto assets were stolen last year, he said he had asked SEC staff to consider whether it would be “appropriate to separate the functions of guard” on the platforms.

He said he asked staff to consider similar steps for crypto exchanges’ market making activities due to issues raised when they trade as “principals against their clients on their platforms.”

Directing staff to explore these issues could be a first step by the commission in formalizing a rule.

Gensler reiterated his belief that most cryptocurrencies – and the platforms they are traded on – should be regulated by the SEC because tokens are considered securities under US law.

“Many entrepreneurs today are raising funds from the public by selling crypto tokens, in the hope that managers will build an ecosystem where the token will be useful,” Gensler said.

“These are not laundry tokens,” he added. “Someone is building an ecosystem to make it useful, which will attract more users to the project. Thus, it is important that we work to obtain crypto tokens which are securities to be registered with the SEC.

Building on his previous calls for crypto platforms to register with the SEC, Gensler said he has instructed staff to work on “getting the platforms themselves registered and regulated a bit like exchanges.

He added that because “some” cryptocurrencies are commodities under US law — operating “like digital gold” — the SEC was also looking to work with the Commodity Futures Trading Commission, a commodity regulator. derivatives he once ran, on “how we might jointly approach such platforms”.

“There is no reason to treat the crypto market differently just because a different technology is being used. We should be technology neutral, but not policy neutral,” he told a lecture at the University of Pennsylvania.

“These crypto platforms perform similar roles to traditional regulated exchanges,” he added. “Investors must be protected in the same way. The United States has the largest capital markets because investors trust it. »

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SEC Explores Corporate Segregation In Crypto Exchanges

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