U.S. SEC working to register crypto lending firms -Gensler
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[July 22, 2022] By
Katanga Johnson
WASHINGTON (Reuters) -The U.S. Securities
and Exchange Commission (SEC) is working to get some cryptolending
companies properly registered if they operate more as investment firms,
the head of the Wall Street regulator told CNBC in an interview on
Thursday.
SEC Chair Gary Gensler also said it was up to large financial
institutions to decide whether they want to include crypto options in
their portfolios for clients, but that the risks of crypto tokens need
to be made public.
"We have focused on this area because many of these firms...may well be
investment companies taking hundreds of thousands or millions of
customers funds, pulling it together, and then relending it while
offering pretty high returns. Sounds a little like an investment
company, or a bank, you might say," Gensler said.
"How are they doing that? What stands behind those promises? We're going
to work with the industry to get these firms properly registered under
the securities laws."
Cryptocurrency companies have said they remain unsure of U.S.
regulations governing products that allow customers to earn interest on
holdings instead of trading them.
Focus on crypto markets has intensified again since May amid recent
spells of volatility that has long-alarmed watchdogs.
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U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler
testifies before a Senate Banking, Housing, and Urban Affairs
Committee oversight hearing on the SEC on Capitol Hill in
Washington, U.S., September 14, 2021. REUTERS/Evelyn Hockstein/Pool
Several crypto lenders have stumbled in recent weeks amid slumping crypto
prices. Celsius Networks has filed for bankruptcy. BlockFi signed a deal with
FTX that gives the crypto exchange the option to buy BlockFi for up to $240
million.
Companies exposed to cryptocurrencies have previously warned that declines in
token prices could have ripple effects, including by triggering margin calls.
Meanwhile, as the U.S. Federal Reserve has begun hiking rates to combat
inflation, investors have fled crypto markets.
Thursday's comments follow Gensler's repeated statements that in his view some
crypto trading platforms may meet the definition of "securities" and should be
traded and regulated as such.
(Reporting by Susan Heavey and Katanga Johnson in Washington)
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