Many cryptocurrency projects flout investor-protection rules and deserve closer scrutiny, said a group of U.S. public-interest organizations in a letter to SEC Chair Gary Gensler.
Many cryptocurrency projects are flouting investor-protection rules and deserve more scrutiny, a group of investor advocates told SEC Commission Chair Gary Gensler in a letter https://t.co/zsPF6HOORF
— Bloomberg Crypto (@crypto) September 20, 2021
In the letter, signed by the educational foundation Americans for Financial Reform, the American Consumer Federation and others, stablecoins, crypto lending and exchanges are mentioned.
«Without meaningful regulatory oversight, the market for digital assets was born and turned into the Wild West. The commissions and other federal financial regulators must enforce the law to better protect investors and bolster the integrity and stability of digital asset markets», the letter states.
In the authors’ view, the collateral backing stablecoins—typically cash, commercial paper and corporate bonds—resembles traditional-market funds and is vulnerable in crisis situations.
With regard to the two largest dollar-pegged stablecoins — Tether (USDT) and USD Coin (USDC) — they noted:
«Clearly, both products could pose significant risks to investors and consumers».
The organizations believe there is no need for the SEC to create a separate set of rules for the digital-asset market. The Commission should “rigorously deploy” existing investor-protection tools.
Gensler took the helm of the SEC in April 2021. In May, he urged Congress to bring clarity to crypto regulation.
In August, Gensler warned of tighter regulation for stablecoins. He also noted that the agency needs additional authority and resources.
In the same month, the head of the SEC urged Bitcoin exchanges to engage in dialogue.
Stablecoins also came under close scrutiny by the Treasury. The department is drafting recommendations for their issuers.
In September, Gensler is needed for cryptocurrencies to survive.
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