SEC Chief Gensler Says More Crypto Flaws Likely

  • SEC Chairman Gary Gensler Sees More Failed Tokens and Less Confidence in Crypto Following TerraUSD Collapse
  • Gensler, a proponent of crypto regulation, said more investors would be affected, the WSJ reported.
  • Stablecoin TerraUSD and sister token luna crashed last week as cryptocurrencies lost more than $1 trillion in market value this year.

Securities and Exchange Commission Chairman Gary Gensler has raised concerns about crypto markets following the collapse of major stablecoin TerraUSD and the cryptocurrency behind it, Luna, this month.

Speaking to reporters after a House Appropriations Committee panel hearing on Wednesday, Gensler said, “I think a lot of these tokens will fail,” the Wall Street Journal reported Wednesday.

“I am afraid that in crypto… there will be a lot of people hurt, and that will undermine some of the confidence in the markets and confidence in the markets in general.”

TerraUSD and luna tumbled last week after the former, an algorithmic stablecoin, lost its 1:1 peg to the US dollar and both effectively fell to zero. The freefall of the two tokens was estimated to wipe out more than $50 billion in paper value, Insider reported.

“The


volatility

in the crypto markets in recent weeks highlights the risks to the investing public,” Gensler said. He has been a strong advocate for more regulation and oversight of the crypto industry, calling for a larger budget for the SEC to oversee the crypto industry during the hearing.

“The highly volatile and speculative crypto market has mushroomed, attracting tens of millions of American investors and traders,” he said.

Last year, Gensler compared the cryptocurrency market to the “Wild West” and said the SEC needed more regulatory authority on the matter. He also said that cryptocurrencies would become mainstream only if there are clearer rules.

Earlier this month, the SEC said it nearly doubled the size of its crypto asset enforcement unit, adding an additional 20 positions to the group “responsible for protecting investors in the crypto markets and from cyber threats.”

“The United States has the largest capital markets because investors have faith in them, and as more investors access crypto markets, it is increasingly important to devote more resources to protecting them,” Gensler said in a press release.

Read more: JPMorgan analysts say the crypto crash is not yet a repeat of winter 2018. They explain why market conditions could still deliver a “significant upside” despite reversing institutional demand, and share tokens that benefit of terra collapse.

Leave a Reply

Your email address will not be published.