SEC Chairman Gary Gensler has called for legislation focused on "crypto trading, lending and DeFi platforms," saying investors are vulnerable in a fast-growing and "volatile sector."
In a letter to Sen. Elizabeth Warren, one of the most outspoken crypto critics, Gensler warned, "Right now, I believe investors using these platforms are not adequately protected."
"Unlike other trading markets, where investors go through an intermediary, people can trade on crypto trading platforms without a broker — 24 hours a day, 7 days a week, from around the globe," he wrote in the letter, which he sent Aug. 5 and Warren's office released Wednesday. "I believe we need additional authorities to prevent transactions, products, and platforms from falling between regulatory cracks. We also need more resources to protect investors in this growing and volatile sector."
Gensler, who taught blockchain at MIT, also weighed in on the ongoing debate as to whether crypto assets should be considered currencies or securities, saying "each token's legal status depends on its own facts and circumstances."
But he also argued that "the probability is quite remote that, with 50 or 100 tokens, any given platform has zero securities. I believe we have a crypto market now where many tokens may be unregistered securities, without required disclosures or market oversight."
He also offered a critical view of stablecoins, tokens pegged to value of fiat currencies, saying these cryptocurrencies "may facilitate those seeking to sidestep a host of public policy goals connected to our traditional banking and financial system: anti-money laundering, tax compliance, sanctions, and the like."
Gensler's letter came in response to Warren's inquiry into the "sufficiency of the Securities and Exchange Commission's authority to regulate crypto platforms."
Warren recently argued that the Financial Stability Oversight Council, led by Treasury Secretary Janet Yellen and which includes Gensler in his role as head of the SEC, should take the lead in developing a regulatory framework for crypto instead of following the status quo of poorly coordinated responses from different federal agencies.