Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC)
Following a tempestuous week for cryptocurrencies, the US Securities and Exchange Commission (SEC) has warned the general public to desist from investing in cryptocurrencies while emphasizing the lack of protection for investors.
While speaking at the FINRA conference held in Washington DC on Monday, Gary Gensler, the chairman of the US Securities and Exchange Commission (SEC) warned against investing in cryptocurrencies. He described them as a “highly speculative asset class” and mentioned that investors in the industry lacked protection. This comes after a recent dip that sent Bitcoin falling below $30,000 which it managed to hold for weeks and stable coins below their $1 peg.
He opined that investors, especially the everyday members of the public, are not getting full and fair disclosures adding that cryptocurrencies should be treated and regulated as securities. “The investment public is not getting disclosures…When you make other asset purchases, we have this basic bargain, you the investing public can make your choices about what risks you take,” the SEC boss said.
He went on to add that “There’s supposed to be full and fair disclosure, and people aren’t supposed to lie to you. Right now, many of these entrepreneurs come up with an idea … and they want to raise money from you. That puts it inside of the securities laws.”
He warned that using a digital wallet on a platform translates to transferring ownership of the wallet’s content to that platform, and that investors shouldn’t be deceived that they own their cryptocurrency assets. “If the platform goes down, guess what? You just have a counter-party relationship with the platform. Get in line at bankruptcy court.”
He didn’t stop there. He added that the digital asset class is not as decentralized as people think. He highlighted major trading and lending venues that are in charge of the majority of the crypto-asset volume.
He spoke about the protection of investors. He called for investor protections while emphasizing an eradication of manipulation and fraud. He also added that cryptocurrency exchange platforms are most times trading and turning the market against investors. “When these platforms take your custody when they take those tokens, they can use them, they can trade them. It’s not like when you trade in the equity markets. They’re actually making markets against you.”
For some, the market fluctuations are just another opportunity to buy the dip. But with so many signs speaking against investing in crypto, should you buy the dip?
Ibhadojemu Lucky Emmanuel is a graduate of Education and Economics from the University of Benin. He has a passion for tech and business and has been writing professionally for over a period of five years. He's written across various topics and segments and knew tech-business was it when he first stumbled on it. He has a great passion for music and arts, and wants to visit as many countries as he can someday.
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