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WASHINGTON — The Securities and Exchange Commission is exploring ways to make it easier for cryptocurrency trading platforms with the agency as exchanges, Chairman Gary Gensler said Monday.
| ticker | security | Last | To change | To change % |
|---|---|---|---|---|
| COIN | COINBASE GLOBAL INC. | 191.65 | +4.69 | +2.51% |
Gensler has been calling for crypto trading platforms like Coinbase Global Inc. to submit to SEC oversight for months, saying the firms allow investors to buy and sell assets that meet the legal definition of securities. The trading platforms have declined. They deny the claim that they list securities and cite a number of technical reasons why they believe SEC regulation is impractical.
“These crypto platforms are playing similar roles to traditional regulated exchanges,” Gensler said in a speech for a University of Pennsylvania Law School event. “So investors should be protected in the same way.”
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Coinbase declined to comment immediately when reached on Monday.
Despite calling themselves exchanges, crypto trading platforms differ from regulated securities exchanges in many ways.
The Securities and Exchange Commission is exploring ways to make it easier for cryptocurrency trading platforms with the agency as exchanges, Chairman Gary Gensler said Monday. (Photo by Evelyn Hockstein-Pool/Getty Images/Getty Images)
In the stock market, an investor places an order to buy or sell a stock through a broker. The broker usually sends the order to an exchange, which matches the buyer to a seller or a registered market maker. The broker also holds or secures the client’s assets in accounts separate from its own.
In the crypto market, trading platforms interact directly with individual investors. They hold their clients’ assets in custody and act as market makers, often taking the opposite side of a trade. This creates new risks and potential conflicts of interest, the SEC said.
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Gensler said he has asked SEC officials to work on ways crypto trading platforms as exchanges and ensure they protect their clients’ assets. He said this may require them to separate their custody and market-making services from other parts of their business.
The cryptocurrency industry has aggressively pushed Washington lawmakers and policymakers to avoid falling under SEC jurisdiction over the past year. (Photo illustration by Sheldon Cooper/SOPA Images/LightRocket via Getty Images/Getty Images)
The cryptocurrency industry has aggressively pushed Washington lawmakers and policymakers to avoid falling under SEC jurisdiction over the past year. They say that cryptocurrency developers would have a hard time complying with the disclosure requirements that the SEC has developed for publicly traded companies.
Gensler expressed his willingness to work with the industry while reiterating the importance of regulating cryptocurrencies, which are securities.
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“If there are actual forms or disclosures that crypto assets really can’t conform to, our staff are here to discuss and evaluate those concerns,” Gensler said. But he added, “Any token that is a security must adhere to the same market integrity rules as other securities.”