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Generally, people who buy cryptocurrencies do not get the
disclosures they get when they make other asset purchases around
things like whether the trading platform they are using is
actually trading against them, or whether they actually own the
assets they store in digital wallets, Gensler said.
"We have this basic bargain: You the investing public can make
your choices about the risk you take, but there is supposed to
be full and fair disclosure, and people are not supposed to lie
to you," he said at the Financial Industry Regulatory
Authority's annual conference in Washington.
His comments came after last week's spectacular collapse of
TerraUSD, a so-called stablecoin that lost its 1-to-1 dollar
peg.
The token's crash sent cryptocurrencies tumbling, a slide that
resumed on Monday, as bitcoin erased the gains it had eked out
over the weekend to trade under $30,000, far below its Nov. 10
record of $69,000.
While crypto markets are thought of as decentralized, the
reality is that most activity occurs on a handful of trading
platforms, which, along with token issuers, need to work with
the SEC to improve industry rules and disclosures, Gensler said.
He pointed to basic market principles like, "anti-fraud,
anti-manipulation, making sure there's not front-running, making
sure an order book is actually real and not made up."
The SEC will continue to be "a cop on the beat," while working
with the Commodity Futures Trading Commission to ensure all
cryptocurrencies are covered, Gensler said.
"There's a lot to be done here, and in the meantime the
investing public is not that well protected," he said.
(Reporting by John McCrank; editing by Jonathan Oatis)
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