U.S. SEC Chairman Gary Gensler has voiced his concern that crypto lending platforms are not in accordance with federal law.
In a recent Wall Street Journal editorial, Gensler argues that cryptocurrencies should not be regulated differently from other financial markets just because they use different technology.
“We must abandon the notion that crypto financing is not susceptible to regulation. In contrast, these regulations have existed for decades. They are being ignored by the platforms. Lack of compliance isn’t a consequence of crypto’s business strategy or technology.
Gensler’s remarks follow the collapse of a number of prominent crypto-lending businesses in recent weeks. After a significant borrower failed on a substantial debt, the troubled cryptocurrency brokerage Voyager Digital filed for Chapter 11 bankruptcy in July.
After freezing customer withdrawals from its platform, cryptocurrency lender Celsius declared Chapter 11 bankruptcy almost a week later. In a New York bankruptcy court, the company’s balance sheet between assets and liabilities showed a $1.19 billion shortfall.
The SEC chairman targeted cryptocurrency exchange platforms last month. Gensler stated that the stock market and cryptocurrency exchanges ought to provide comparable consumer protections. He also brought up the idea of eliminating the market-making element of cryptocurrency exchanges via regulation.
Cryptocurrency exchange platforms may also operate as market makers. This suggests that one of the platforms may be the buyer on the opposite side of your token sale. Stock exchanges do not perform this action. As a result of inherent conflicts of interest, they do not function as their own market makers.