Senator Elizabeth Warren, a member of the Senate Banking Committee, has sent a letter to SEC Chairman Gary Gensler telling the securities regulator that crypto exchanges may be undermining the SEC’s mission of basic investor protections.
Gensler, for his part, has publicly worried that crypto exchanges have not been held to a high enough level of scrutiny went it comes to regulation. In fact, it is widely expected that Gensler is looking to tighten compliance around crypto exchanges that are typically not held to the same standard as regulated stock exchanges.
According to Reuters, Senator Warren stated:
“While demand for cryptocurrencies and the use of cryptocurrency exchanges have sky-rocketed, the lack of common-sense regulations has left ordinary investors at the mercy of manipulators and fraudsters. These regulatory gaps endanger consumers and investors and undermine the safety of our financial markets. The SEC must use its full authority to address these risks, and Congress must also step up to close these regulatory gaps.”
Warren added that “the lack of regulation to provide basic investor protections is unsustainable.”
Gensler, a Washington DC insider who previously taught a course on Fintech at MIT and is very knowledgeable on digital assets, did not include crypto in his regulatory agenda for the SEC. The omission of digital assets caused two SEC Commissioners, Hester Peirce and Elad Roisman, to publicly issue a statement inquiring about digital asset regulation. The digital asset industry in the US has long yearned for bright-line rules in a frequently opaque regulatory environment that has been criticized as regulation by enforcement.
While the letter from Warren may be viewed as lambasting the SEC for its inaction, in reality, there is a good chance it was crafted to queue up additional compliance for crypto exchanges by the Commission – minus any legislation from Congress.