April 25, 2024

Gary Gensler: "Crypto companies are required to disclose full information to customers"

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Gary Gensler: “Crypto companies are required to disclose full information to clients”

Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler called on cryptocurrency lending platforms to provide clients with complete and reliable information.

In an interview with Yahoo Finance, SEC Chairman GaryGary Gensler criticized cryptocurrency lending services that offer “unrealistic” returns ranging from 4% to 20%. As Gensler puts it, if “it's too good to be true, it probably is,” because such investments involve big risks.

The SEC Chairman also mentioned revenues fromfiat-pegged stablecoin deposits and compared them to poker chips, which need to be regulated as part of a financial ecosystem prone to fraud and manipulation. Gensler believes the rules that apply to brokerages and other traditional companies can be adapted for the cryptocurrency space to protect investors. He considers it necessary to oblige any cryptocurrency platforms to fully disclose to clients all information on the basis of which they can make an investment decision.

“Investors decide for themselves how much risk they take.ready to go, but platforms that raise money or sell financial assets must honestly disclose all information. This needs to be applied across the entire industry, whether an investor is buying cryptocurrencies or securities,” Gensler said.

The SEC Chairman mentioned the situation withcryptocurrency lender BlockFi – the Commission previously stated that the company does not meet regulatory requirements. In February, it became known that BlockFi would pay the SEC and regulators in four states about $100 million, and in June, the Iowa state regulator demanded that BlockFi pay an administrative fine in the amount of $1 million. According to Gensler, the company had problems due to the fact that it did not provided investors with publicly available information.

Gensler added that exchanges, lenders andbroker-dealers are the three main groups of companies with which the SEC will continue to negotiate compliance with its requirements in the coming months. To fully embrace cryptocurrency regulation, the SEC will have to work with the US Commodity Futures Trading Commission (CFTC) and banking regulators.

Gensler recently clarified his position on Bitcoin, calling it a commodity. However, Gensler is not ready to say the same for other cryptocurrencies.