The Securities and Exchange Commission (SEC) has said that it is looking forward to cooperating with lawmakers to add regulation and protection to cryptocurrency investors.
According to Gary Gensler, the US top financial regulator chairman at the SEC, regulators are attempting to provide protection for cryptocurrency investors because the exchanges where these tokens (cryptocurrencies) are sold can cause significant harm to investors through fraud and manipulation. " Many of these tokens are investment contracts under the securities law. Over the years, the SEC has brought 75 cases in this area," Gensler stated.
Additionally, the Hester Peirce, a Commissioner at the SEC made the urgent call back in February to introduce a form of regulation to the cryptocurrency market amid its growing popularity. Gensler also said that the SEC plans on gathering comments from crypto custody arrangements by broker-dealers. "There are many challenges and gaps for investor protection in these markets. Tokens currently on the market that are securities may be offered, sold, and traded in non-compliance with the federal securities laws." said Gensler.
"Furthermore, none of the exchanges trading crypto tokens has registered yet as an exchange with the SEC. Altogether, this has led to substantially less investor protection than in our traditional securities markets and to correspondingly greater opportunities for fraud and manipulation. The Commission has prioritized token-related cases involving fraud or other significant harm to investors." said Gensler.
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