SEC Chief Calls for Tougher Oversight of Bitcoin Exchanges and Stablecoin Issuers

SEC is considering tighter regulation of stablecoin issuers and restrictions on cryptocurrency exchanges acting as custodians and market makers. In remarks, said Gary Gensler, head of the agency.

“Unlike traditional platforms, bitcoin exchanges hold their clients’ assets. In 2021, hackers stole $14 billion. Agency staff began to construct a framework for their operation to best safeguard clients’ assets. In particular, account segregation would be prudent,” — Gary Gensler, head of the SEC.

Gensler argues that a similar logic applies to the platforms’ own trading operations, which may be conducted against its users.

The head of the SEC also turned his attention to stablecoin issuers.

“The issuers of the three largest stablecoins are trading or lending platforms. Retail investors in the United States do not have direct redemption rights in two of them. There are conflicts of interest and questions about market integrity that can be addressed by strengthening oversight,” he explained.

Earlier, Gensler urged Congress clarify the regulation of bitcoin exchanges. Later, he said that the latest rules should meet investor-protection requirements, similar to those applied in stock and derivatives markets.

In January 2022, the SEC promised to strengthen oversight of bitcoin exchanges.

Earlier, the U.S. Treasury released a report on the risks associated with stablecoins.

The working group urged Congress to treat their issuers as depository institutions with mandatory deposit insurance, putting them on a par with banks.

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