Gary Gensler: “I am neutral about cryptocurrencies, but not about protecting investors”

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Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler believes that cryptocurrency lenders should be regulated similarly to investment companies.

Thanks to the rapid implementationcryptocurrencies, many financial institutions and investment firms are trying to become participants in the cryptocurrency space by offering products and services related to digital assets. Therefore, Gary Gensler suggested that the activities of companies involved in cryptocurrency lending “echoes” the activities of investment firms. Thus, companies like BlockFi may well be considered investment companies because they manage millions of dollars of client funds, which are then pooled and re-lent out.

“Cryptocurrency lenders are likeinvestment companies or banks. Some of them offer quite high returns. But what is behind these promises? This industry needs to be closely monitored. Cryptocurrency brokers must be registered under securities laws to protect the public,” Gensler said.

The SEC Chairman emphasized that it is neutraltreats the latest technologies, but is very sensitive to investor protection. He called cryptocurrencies a speculative asset class, explaining that most of them have the properties of securities. Additionally, many crypto startups often fail, and the venture capital sector is no exception. Recently, several cryptocurrency platforms declared bankruptcy at once: Voyager Digital, Three Arrows Capital and Celsius. The SEC intends to develop regulations to protect investors and will continue to work with lawmakers and industry participants on the issue, Gensler said.

Earlier, the SEC Chairman expressedconcerns that the bill introduced by Senators Cynthia Lummis and Kirsten Gillibrand could create "confusion" in the traditional finance market.