SEC Chair Gary Gensler Issues Stern Warning To Crypto Firms, Demands Compliance Following Action on Kraken Staking
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In the world of cryptocurrencies, the U.S. Securities and Exchange Commission (SEC) is considered the watchdog. The SEC ensures that investors are protected from fraudulent and illegal activities in the crypto industry. In recent years, the SEC has been closely watching crypto firms that are offering investors unregistered securities, which has brought questions regarding the transparency and legality of those firms.
In a recent interview on CNBC’s Squawk Box, SEC chair Gary Gensler flashed red signals with heavy fines to those crypto firms operating their crypto business without following the law. This statement came after the SEC fined crypto exchange Kraken a whopping $30 million for offering unregistered staking services to US investors.
SEC Takes Leading Role In Bringing Crypto Firms Under Regulations’ Umbrella
In the interview, Gary Gensler alarmed other crypto firms to take note of the SEC’s move to halt crypto exchange Kraken’s operation and forced it to pay $30 million as a fine for offering unregistered securities in its staking service to US customers.
Gensler noted that it is time for crypto firms to register their businesses with the SEC and abide by the laws of the United States to keep running their operations. As the regulatory body is on a mission to protect investors from illegal and fraudulent activities in the cryptocurrency industry, Gensler is making it clear that exchanges must play by the rules.
According to Gensler, many crypto exchanges opt not to register with the SEC, which puts them at risk of violating the regulations. Gensler has criticized the business models of many crypto projects as being “rife with conflict” and needing “disentangling” bundled products.
Gensler stated, “Companies like Kraken can offer investment contracts and investment schemes, but they have to have full, fair, and truthful disclosure. And this puts the investors who watch your program in a better position. That’s our basic bargain. They were not complying with that basic law. 330 million Americans are our clients; Kraken knew how to register, others know how to register, it’s just a form on our website… And if they want to offer staking, we’re neutral, come in register because investors need that disclosure.”
Regulations Are The Only Way For Success In The Crypto Market
The exponential growth of the crypto market needs to come under regulation to propel great success in the future. Therefore, Gensler has also been engaging directly with market participants, discussing the importance of compliance and explaining the SEC’s regulatory framework.
When asked about the SEC’s goals for the crypto market, Gary Gensler emphasized that the regulator is “technology neutral.” This means that the SEC is not attempting to eliminate crypto from the mainstream financial system, but rather, it is focused on ensuring that all participants in the crypto market comply with its regulations.
Gensler said, “If this field has any chance of survival and success, it’s time-tested rules and laws to protect the investing public. Don’t have your hand in the customer’s pocket, using their funds for your own platform.”
Moreover, the SEC has targeted the astronomical surge in bankruptcy filing recently following FTX’s collapse as Gensler commented,
“If somebody’s taking their tokens and transferring it to that platform, the platform controls it, and guess what happens if they go bankrupt? You stand in line at the bankruptcy court.”
Hence, crypto firms should take Gensler’s warning seriously, as the SEC can put hefty fines, halt operations, and put unregulated firms in trouble. However, the community has criticized SEC’s steps as regulators need to provide clear guidelines before taking legal actions.
Filed under: Bitcoin - @ February 11, 2023 7:18 am