The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has warned that a lot of crypto tokens will fail and many crypto investors will get hurt following the collapse of terra (LUNA) and stablecoin terrausd (UST).
Warning from SEC Chairman Gensler after the collapse of LUNA and UST
U.S. Securities and Exchange Commission Chairman Gary Gensler on Wednesday expressed concerns that more crypto investors will be harmed by the implosion of the cryptocurrency terra (LUNA) and stablecoin. terrausd (UST).
He told reporters after a House Appropriations Committee panel hearing:
I think a lot of these tokens will fail … I fear that in crypto… there’s going to be a lot of people hurt, and that will undermine some of the confidence in markets and trust in markets writ large.
Last week, the algorithmic stablecoin UST lost its peg to the US dollar, sending its price and the price of the cryptocurrency LUNA into a tailspin.
The collapse of the two cryptocurrencies has caused grave concerns among regulators and lawmakers. U.S. Treasury Secretary Janet Yellen cited the collapse of UST while calling for increased regulations of stablecoins last week.
Gensler said on Wednesday that SEC-registered asset managers do not have significant exposure to crypto assets. However, he noted that his agency has less visibility on private funds, especially family offices. The SEC chief thinks most cryptocurrencies are securities. He urged cryptocurrency trading platforms to approach the SEC and register.
“There is a path forward that we’re talking with these exchanges about to do both: to get the platforms registered and have a pathway for the tokens as well,” he said, noting that the agency has the authority to create exemptions where necessary. He added:
They should move towards registration or, you know, we’ll be the cop on the spot, and we’ll take the enforcement action.
However, Gensler has been heavily criticized by some for taking an enforcement-centric approach to regulating the crypto sector. He announced earlier this month that the SEC plans to nearly double the size of its Enforcement Division’s crypto unit.
The chairman of the SEC said Wednesday that his agency does not have sufficient resources to adequately monitor the financial markets. He pointed out:
We’re really outpersonned.
Commenting on the SEC lacking resources, U.S. Representative Tom Emmer tweeted to Gensler:
You are putting all of the taxpayer funded resources of the SEC into crypto crackdowns. Now you don’t have the funds to do your job, so you come to Congress for more? You laugh.
