Gary Gensler, chairman of the United States Securities and Exchange Commission (SEC), said in a statement recently. cryptocurrency announced that they are looking for ways to get their trading platforms to be registered as exchanges with the SEC.
Like Gary Gensler, Coinbase bitcoin and crypto platforms for months to register with the SEC, claiming that these platforms legally mediate the buying and selling of assets that meet the definition of securities.
Crypto exchanges, on the other hand, rejected these calls. Exchanges claim that they do not sell securities and therefore SEC regulation cannot be applied to them.
“Cryptocurrency Exchanges Should Be Regulated Similar to Traditional Exchanges”
Speaking at an event organized by the University of Pennsylvania, Gensler said:
“These cryptocurrency platforms play similar roles to traditional regulated exchanges. So investor protection needs to be implemented in the same way.”
Although crypto trading platforms describe themselves as stock markets, they operate differently than regulated stock exchanges.
In the stock market, the investor places an order for a stock he wants to buy or sell through a broker.
This broker transmits the given order to an exchange, which brings the buyer and seller together or directs them to a registered market maker.
However, in the crypto markets, trading platforms interact directly with individual investors.
It holds the assets of its customers for them and can also be on the opposite side of the trade by acting as a market maker. The SEC said in its statement that this creates new potential risks and conflicts.
#cryptocurrency We’re exploring ways to get exchanges to register as exchanges with the SEC -SEC Chairman Gary Gensler -WSJ
— Bitcoin System (@bitcoinsystem) April 4, 2022
SEC Will Work With CFTC To Regulate Crypto Platforms
Gary Gensler has asked the SEC team to work on new ways to register cryptocurrency platforms as exchanges and protect clients’ assets.
Gensler stated that crypto exchanges may need to separate their client asset holding and market maker services from their other activities.
Gensler also stated that he will be working with the U.S. Commodity Futures Trading Commission (CFTC) for platforms that sell both crypto-based security tokens and commodity tokens.
*Not investment advice.