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Securities and Exchange Commission Chairman Gary Gensler called on Congress to provide more funding and authority to regulate the market for cryptocurrencies during a hearing on Wednesday.
Gensler said there were “gaps” in regulation of cryptocurrencies, like bitcoin
BTCUSD,
and ethereum
ETHUSD,
noting that there are “thousands” of them extant, and many of those are operating as securities. “We’ve only been able to bring 75 actions and there are others currently that are not compliant,” he told a House Appropriations subcommittee.
The most pressing issue, however, is a lack of oversight of crypto exchanges, Gensler said. He added that he would like to work with Congress “to bring investor protection to the platforms, where these sometimes-commodities, sometimes-securities are trading on the platform.”
He gave the example of front running, whereby an exchange could share order information so that another investor can trade ahead of a crypto transaction, making other investors’ purchase or sale more expensive. “Without a cop with a beat and some rules of the road, then market participants can front run your orders,” the chairman noted.
“We have the SEC trying to protect against fraud in manipulation [in traditional stock exchanges,]” Gensler said. “Not so in the crypto world, and so it’s trying to bring the similar protections to the exchanges where you trade crypto assets, as you might expect on the New York Stock Exchange or Nasdaq.”
Gensler also noted the SEC’s cooperation with the Commodity Futures Trading Commission and the U.S. Treasury to combat criminal activity facilitated by cryptocurrencies. “They’re keely focused on anti-money laundering and guarding against illicit activity,” he said, adding that he wants to “augment and support their efforts.”
The chairman also suggested that he would like to work with Congress to pass legislation that would enhance investor protection in the crypto space.
