U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler has issued a stern warning to the cryptocurrency industry, saying its future depends on stronger investor protections.
Speaking in an interview on CNBC's Squawk Box today, Gensler reiterated his long-standing call for greater transparency and regulation in the crypto market.
Gensler noted that there are numerous market disruptions plaguing the industry, pointing to the collapse of major crypto companies in 2022. Among the casualties were high-profile names like crypto exchange FTX, run by now-convicted CEO Sam Bankman-Fried, as well as hedge fund Three Arrows Capital and lenders Celsius and Genesis.
Bankman-Fried was sentenced to nearly 25 years in prison on fraud charges, and Alameda Research co-CEO Caroline Ellison received a two-year sentence for her role in the FTX collapse. Former Celsius CEO Alex Mashinsky is currently awaiting a sentencing hearing early next year.
Gensler said the following on the subject:
“Just look at the leading names in this space, in the crypto space, just two years ago. Many of them are in jail now, and I’m not just talking about SBF, there have been tens of billions of dollars in losses and bankruptcies and things like that. What innovative space in America can survive without building trust in that space and protecting investors or consumers?”
Gensler said the survival of the industry depends on proper regulation, adding: “This space will not survive for long without investor protection or consumer protection.”
Gensler, who has been a fierce critic of the crypto industry’s current regulatory landscape, has consistently argued that most cryptocurrencies should be classified as securities, requiring platforms to register with the SEC. However, he acknowledged that Bitcoin is an exception and reaffirmed that it does not fall into the category of a security.
“With regard to Bitcoin, my predecessor and I said it is not a security,” Gensler said, adding, “You now have a way to actually express that view, to buy it through exchange-traded products.”
*This is not investment advice.
