In the aftermath of FTX’s high-profile failure, the chairman of the U.S. Securities and Exchange Commission (SEC) apparently said that a crackdown on the cryptocurrency business is inevitable.
According to a recent Bloomberg story, SEC Chairman Gary Gensler asserts that the agency would go after crypto businesses that do not comply with its laws and compares them to casinos.
“The runway is decreasing in length. This Wild West’s casinos are noncompliant intermediates.”
In addition, he believes that the trend of crypto exchanges demonstrating they have reserve assets to back up their clients’ deposits is meaningless since the technique does not meet existing regulatory disclosure requirements.
“Proof of reserves does not fulfil segregation of client funds under the securities rules” and “Proof of reserves is not a comprehensive accounting of the assets and liabilities of a corporation.”
According to Gensler, authorities should ensure that crypto businesses keep their funds separate from their client’s assets and maintain proper records of all transactions.
“Some experts in this industry have discussed solutions to provide clients certainty that their crypto assets exist. They should do so by complying with time-tested custody, segregation of client cash, and accounting regulations.”
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.