April 1, 2023

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 customers"

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler called on cryptocurrency lending platforms to provide customers with complete and accurate information.

In an interview with Yahoo Finance, SEC Chairman GaryGary Gensler criticized cryptocurrency lending services offering "unrealistic" returns ranging from 4% to 20%. As Gensler put it, if "it's too good to be true, then it probably is," because such investments involve great risks.

The SEC chairman also mentioned income fromdeposits in stablecoins pegged to fiat currencies and compared them to poker chips that need to be regulated as part of a financial ecosystem prone to fraud and manipulation. Gensler is convinced that the rules that apply to brokerages and other traditional companies can be adapted to the cryptocurrency space to protect investors. He considers it necessary to oblige any cryptocurrency platforms to fully disclose to clients all the information on the basis of which they can make an investment decision.

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

The chairman of the SEC mentioned the situation withCryptocurrency lender BlockFi – previously, the Commission said that the company does not comply with the requirements of regulators. In February, it became known that BlockFi would pay about $100 million to the SEC and four state regulators, and in June, the Iowa state regulator demanded that BlockFi pay an administrative fine 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 the regulation of cryptocurrencies, the SEC will have to interact with the U.S. Commodity Futures Trading Commission (CFTC) and banking regulators.

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