2 - 3 minute read
The U.S. Securities and Exchange Commission (SEC) is reportedly planning to crack down on non-compliant cryptocurrency firms, according to Bloomberg. SEC Chair Gary Gensler stated that the “runway is getting shorter” for these firms, which he likened to “casinos in this Wild West.”
In addition to this warning, Gensler also commented on the recent trend of cryptocurrency exchanges proving that they have reserve assets to back up their customers’ funds. He stated that this practice “is neither a full accounting of the assets and liability of a company, nor does it satisfy segregation of customer funds under the securities laws.” Instead, Gensler emphasized the importance of exchanges separating their own funds and their customers’ funds, as well as maintaining accurate records of all transactions.
“There are some in this field that have talked about ways to give customers confidence that their crypto is really there,” Gensler said. “They should do that by coming into compliance with time-tested custody, segregation of customer funds rules and accounting rules.”
This announcement follows the SEC’s recent charges against Caroline Ellison and Gary Wang, the former CEO and co-founder of cryptocurrency exchange FTX, respectively. The charges have sparked speculation that the SEC may take a more aggressive approach towards regulating the cryptocurrency industry.
“The runway is getting shorter. The casinos in this Wild West are non-compliant intermediaries.”
Gary gensler, sec chairman
It is worth noting that the SEC has not yet taken any action to ban cryptocurrency exchanges, but it remains a possibility. The agency has previously stated that it is open to considering applications for cryptocurrency-based exchange-traded funds (ETFs) but has yet to approve any.
This potential crackdown on non-compliant cryptocurrency firms comes as the industry faces increased scrutiny following the recent collapse of FTX. The agency’s charges against Ellison and Wang have raised concerns about the security of customers’ funds on cryptocurrency exchanges, and Gensler’s comments further highlight the need for exchanges to comply with regulatory standards in order to protect their customers.
As Gensler said, “There are no shortcuts to compliance.” It will be important for cryptocurrency firms to follow the established rules and regulations in order to ensure the safety and security of their customers’ funds and maintain the integrity of the industry as a whole.
