The $2 trillion cryptocurrency market needs more investor protection in the U.S. including possible regulations for cryptocurrency exchanges, says Securities and Exchange Commission (SEC) Chairman Gary Gensler.
Without regulatory oversight on crypto exchanges, he argued that there is no protection against fraud or manipulation.
Given that crypto exchanges do not have a regulatory framework provided by the SEC or the Commodity Futures Trading Commission (CFTC), the SEC Chairman suggests that Congress could bring greater investor protection to cryptocurrency exchanges:
Gensler emphasized that Bitcoin is a commodity under U.S. law and is not subjected to the SEC’s oversight.
“Right now these exchanges do not have a regulatory framework at the SEC or at our sister agency, the Commodity Futures Trading Commission. Right now there’s not a market regulator around these crypto exchanges and thus there’s really no protection around fraud or manipulation.”
He further noted that the regulatory agency was paying more attention to the interactions between social media and market behavior and the risks factors that can come with it:
"This practice, called sentiment analysis, has picked up steam in the last couple of years, and it has grown to include online communities. With that comes the risk that nefarious actors may try to send signals to manipulate the market. This is an area for which we will continue to deepen our understanding, resources, and capabilities."