Gary Gensler, head of the Securities and Exchange Commission (SEC), reiterated that most altcoin projects are securities, saying that exchanges may engage in transactions that may be against the interests of their clients.
Gary Gensler says cryptocurrency exchanges are ‘market makers to their customers’
SEC chairman, lack of distinction between services like custody, market making and providing a trading platform to their customers warns that it leaves him vulnerable. Speaking to Bloomberg on Tuesday, Gensler included statements targeting cryptocurrency exchanges alongside the topic of regulation of cryptocurrencies:
Crypto has many of the challenges of platforms trading in front of their customers. In fact, they often trade against their customers because they are trading market share against their customers.
SEC minister warns these altcoin projects
As we have mentioned in cryptokoin.com news, US Treasury Secretary Janet Yellen, in her speech to the Former Committee on Banking and Money on Tuesday, drew attention to the extreme volatility of Terra (UST) and emphasized the need for a regulatory framework. SEC chairman Gary Gensler emphasizes that some stablecoins such as Binance, USD Coin and Tether are closely linked to exchanges:
I don’t think this is a coincidence. All 3 major stablecoins were created by exchanges. Each and every one of the platform was created by exchanges to facilitate trading on these platforms and potentially avoid AML and KYC (money laundering and authentication).
To recall, Gensler previously warned about crypto exchanges trading before customers’ orders. There was no response to Gensler’s comments above from Coinbase (Circle – USDC) and Bitfinex (Tether). Binance, on the other hand, stated that the (BUSD) exchange has strict rules and information is shared transparently. Disclosure:
The most important part of BUSD’s trustworthy reputation as a stablecoin is its regulatory compliance.
BUSD offers a 100% transparent service that verifies, protects, and ensures the reserves that effectively maintain its US dollar peg.https://t.co/xb4egOzM9b
— Binance (@binance) May 10, 2022
SEC’s focus in 2022 crypto exchanges
In January, Gensler said that crypto exchanges should face further scrutiny from the financial watchdog as they need to directly regulate such companies to provide greater protection to investors:
I’ve asked staff members to look into every possible way to get these platforms under investor protection. If exchanges don’t enter the regulated space, it will be another year where the public is vulnerable.
