Gary Gensler, chairman of the US Securities and Exchange Commission (SEC), continues to damage the crypto industry. In the investor advisory committee, the Chairman of the SEC stated that crypto lending and exchange platforms operate “investment advisors cannot rely on as qualified custodians.” Gensler added:
Just because a crypto trading platform claims to be a qualified custodian, doesn’t mean it is. When this platform fails – something we have seen time and again – investors’ assets often become the property of failed companies, leaving investors on the line in the bankruptcy court.
For Gensler, advisers must comply with current custody rules, which require investors’ funds and securities to be held with a “qualified custodian.” These qualified custodians, identified by Gensler, are money managers for clients regulated by the SEC under the US Investment Advisers Act of 1940.
This follows the proposed new federal SEC’s regulations that will expand the holding rules to include cryptocurrencies and require exchanges to register to hold client assets. SEC filing claims:
(…) we replace the detention rules as a new rule 223-1 under the Advisory Law (“security rules” or “proposed rules”) and propose some amendments to strengthen their protection.30 The proposal is designed to identify. evolution in products and services investment advisors offer to clients and to strengthen and clarify the protection held there.
Gensler also mentioned to the advisory committee that predictive data technology could create “related conflicts of interest” related to the advisor’s requests to clients. Gensler said he asked agency staff for suggestions on how to address the issue.
SEC Continues Regulatory Enforcement Against Crypto Industry
The new statement made by the Chairman of the Securities and Exchange Commission is related to the new actions taken by the regulatory agency.
Recently, the SEC charged Singapore-based Terraform Kabs and Do Hyeong Kwon in “managing multi-billion dollar crypto assets” “securities fraud”, claiming to be involved in algorithmic stablecoins and other crypto asset securities. Gensler said:
We state that Terraform and Do Kwon failed to provide the public with complete, fair, and honest disclosures as required for crypto asset securities, especially for LUNA and Terra USD.
The SEC recently cracked down on crypto companies offering “securities without registration.” Regulatory violations have left investors with many questions and unclear rules.
For this end, Coinbase has also opened campaign called “Crypto435” to listen to the concerns and requests of US-based customers affected by the SEC’s action. The campaign will take place in all 435 congressional districts in the US.
The crypto market cap is $1.022 trillion at press time, down -1.79% over the past 24 hours and down -45% over the past year. Bitcoin’s market capitalization remains at $450 billion, representing a dominance of 40.45%.
On the other hand, the stablecoin market capitalization is at $136 billion, representing a 12% share of the total market cap of the crypto ecosystem.
Featured Image from Unsplash, chart from TradingView.com