New Cryptocurrency Statement from SEC Chairman Gary Gensler: “Additional Sanctions Should Be Expected”

According to Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), cryptocurrency businesses do not properly protect their clients’ assets and often confuse them with their own funds.

SEC Chairman Gensler Claims Cryptocurrency Companies Are Mixing Customers Assets With Their Own Assets

“This is a largely non-regulatory area,” Gensler said in an interview with Bloomberg. “They’re mixing client funds with their own business.”

The harsh assessment by Wall Street’s main auditor comes after months of warnings from Gensler and US regulators about the potential dangers posed by the digital asset industry. The SEC claims that many tokens and crypto products are actually securities traded on the blockchain and must be registered with the agency.

The regulatory agency announced Thursday that it is known as Kraken. bitcoin announced that the exchange had agreed to pay a $30 million penalty for resolving allegations that staking products for American customers violated SEC rules.

The firm, which also agreed to discontinue these products in the US as part of the deal, did not accept or reject the regulator’s claims.

Crypto staking works by allowing users to earn returns for allowing their tokens to be used to facilitate transactions on a blockchain. The SEC said that, like several other digital asset products, it could be similar to a security that needs to be registered with the institution.

In an interview with Bloomberg on Friday, Gensler specifically pointed out that crypto exchanges often play multiple roles. He suggested that business models can create significant conflicts of interest:

“We do not allow the New York Stock Exchange to also operate a hedge fund and trade on the stock market; Why do we do this here?”

Gensler said firms should expect additional enforcement actions by the agency unless they begin to comply with the regulator’s rules.

*Not investment advice.