The US Securities and Exchange Commission (SEC) wants to have more control over cryptocurrency exchanges in the country. In order to achieve that goal, the regulatory agency is looking to collaborate with Congress, as well as other regulators, to increase its oversight of the trading platforms. Given the SEC’s track record of denying new crypto investment vehicles, the outcome of any new regulatory initiatives is cause for concern.
Gary Gensler, the newly appointed chairman of the SEC, wants the commission to work with fellow regulators and Congressional members to fill what he perceives as gaps in investor protection in crypto markets. He announced his plans at a hearing before the Financial Services and General Government subcommittee of the House of Representatives yesterday, adding that that the SEC must be able to provide similar protections for crypto exchanges that investors receive when trading on the New York Stock Exchange or Nasdaq.
Gensler asserted, “If you placed an order on an app, and you said, ‘Alright, I want to buy a stock,’ there are rules that protect you that somebody won’t use your order and get ahead of you. […] So, it’s trying to bring the similar protections to the exchanges where you trade crypto assets as you might expect at the New York Stock Exchange or Nasdaq.”
The new SEC head also laid out some of the challenges to regulating the crypto industry, emphasizing that the agency is “under-resourced” in financial terms when compared with some of the other entities in the crypto industry. “We only spend about 16% or 17% of our budget, about $325 million a year, on technology, which is less than probably some large firms spend in a month. Some of them even spend that much in two weeks,” he noted.
Gensler previously suggested that the SEC and Congress need to cooperate in order to properly address crypto exchange regulations. Those remarks were made during a hearing of the House Financial Services Committee in early May that was called to discuss market volatility. Joining Gensler in his wish to provide more oversight of crypto exchanges is Michael Hsu, the new head of the Office of the Comptroller of the Currency. He announced last week that the agency has been in talks with the US Federal Reserve and the Federal Deposit Insurance Corporation about setting up an “interagency policy sprint team” focused exclusively on crypto, adding that he doesn’t believe his predecessor, Brian Brooks, adequately considered financial stakeholders when he began to initiate programs to support digital currencies.