Gensler warns as crypto crashes: 'The public is not protected'

SEC Chair Gary Gensler warned Congress Wednesday that consumers and investors are vulnerable in an increasingly volatile crypto market now reeling from a sharp downturn.

Citing the recent collapse in the crypto market's value, Gensler said, “This is a field that is now worth $1.2 trillion. Two weeks ago it was supposedly worth $2 trillion.”

“The public is not protected,” he testified at a House Appropriations Committee hearing on the proposed budget for the SEC and the FTC. “They don't have the disclosures from these entrepreneurs.”

In a clear reference to the UST stablecoin meltdown, Gensler noted that “one crypto complex went from like $50 billion of value to near zero just in the last three weeks.”

Gensler made a pitch for more resources for the SEC in order to more effectively monitor the crypto industry. The SEC recently announced that it was expanding its enforcement team to focus more closely on crypto.

“We are outpersoned,” he said. “We're not trying to grow really significantly,” but the SEC hopes to “grow our enforcement arm in this space.”

He urged crypto exchanges “to come in and register or frankly, we're going to continue to use what Congress has given us in [areas] of enforcement and examination function.” “I prefer if they'd come in,” he said. “We can also use our exemptive authorities.”

Gensler has faced criticism for the SEC’s approach to the crypto industry. SEC Commissioner Hester Peirce has said the agency under Gensler has not done enough to reach out to the industry and come up with rules for how crypto companies should operate.

Gensler reaffirmed his key view about crypto, citing the “underlying innovations” from it that could be useful in finance. But he stressed the need for more transparency and information disclosures from crypto companies.

“If you're raising money from the public, you're an entrepreneur raising money from the public, you should have full and fair disclosure, and, guess what, not lie to them,” he said.