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The expanded Securities and Exchange Commission (SEC) oversight
would see the agency regulate platforms on which the trading of
securities and non-securities is "intertwined" by requiring them
to register with the SEC, Gensler said in a virtual speech to an
audience at the University of Pennsylvania, his alma mater.
The agency will also collaborate with the Commodity Futures
Trading Commission - its sister market regulator - to scrutinize
platforms that trade both crypto-based security tokens and
commodity tokens, said Gensler, adding that a potential
"segregation" of token custody between trading platform assets
and customers' assets would also be considered to help stave off
theft.
"The crypto market is highly concentrated, with the bulk of
trading taking place on only a handful of platforms...which play
roles similar to those of traditional regulated exchanges. Thus,
investors should be protected in the same way," Gensler said.
"Any token that is a security must play by the same market
integrity rulebook as other securities under our laws."
Much of crypto trading is based in offshore jurisdictions and
operates in a regulatory gray area because they do not have a
centralised system of oversight, which allows such trading to
bypass the traditional gatekeepers of finance such as banks and
exchanges.
While some platforms, like decentralised finance - or DeFi -
platforms, allow users to lend, borrow and save in digital
assets without many requirements, they lack a central operator.
SEC Chair Gary Gensler, who has previously likened trading on
these platforms as that of a "Wild West," said Monday's move is
aimed to better protect retail investors using all crypto
trading platforms.
(Reporting by Katanga Johnson in Washington; Editing by Andrea
Ricci)
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