US Securities and Exchange Commission chair discusses regulating the digital money market on ‘The Claman Countdown.’
Securities and Exchange Commission chairman Gary Gensler spoke with Fox Business on Tuesday in response to reports his agency is scrutinizing the relationship between the U.S. arm of the Binance cryptocurrency exchange and two firms tied to Chinese-Canadian business executive Changpeng Zhao, the founder of Binance.
On “The Claman Countdown”, host Liz Claman noted Gensler cannot speak to individual cases but asked why a currency exchange not disclosing such relationships is an issue for the SEC.
“Most of the activity in this asset class – as you said, $2 trillion – is happening on centralized exchanges or lending platforms,” he said. “And you saw yesterday we had an announcement that I can speak about with regard to one of the large lending platforms. And why does it matter? 95% of the activity is happening there.”
“What’s important is investors get basic investor protection protections against fraud and manipulation,” Gensler added. “And as many of the tokens on these platforms may well be securities, that’s where the Securities and Exchange Commission comes in.”
The U.S. Securities and Exchange Commission (SEC) said on Friday that it would delay enforcement of certain assets from a new disclosure rule for off-exchange securities until Jan. 3, 2022. Photographer: Andrew Harrer/Bloomberg via Getty Images (Photographer: Andrew Harrer/Bloomberg / Getty Images)
Gensler also discussed the recent $100 million settlement between the SEC and 32 states and BlockFi Lending LLC over its failure to register offers and sales of its retail crypto lending product, as well as violations of the Investment Company Act of 1940.
According to the SEC, the company began offering and selling BlockFi Interest Accounts (BIAs) to the public in March 2019, in which investors lend crypto assets to the company in exchange for its promise to provide a variable monthly interest payment.
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“[BlockFi] entered into a settlement arrangement to [register] so in a timely way,” Gensler said.
BlockFi Lending LLC has reached a $100 million settlement with the Securities and Exchange Commission and 32 states after being charged with failing to register offers and sales of its retail crypto lending product and violating registration provisio (BlockFi)
“And importantly, what we found there is that not only was it not complying with what’s called the 1933 Act or registration, but also the Investment Company Act of 1940, offering the public returns by pulling those assets and investing those assets, the crypto assets. And what we’re working with them, we’re trying to see if we can get this whole area, these crypto exchanges, and lending platforms inside and investor protection envelope.”
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“And then, if the public wishes based upon not to invest or even to speculate, that’s up to the public,” Gensler added. “But to have the basic protections of protect against fraud, manipulation – to have disclosure – these are the things that we have in our stock markets and [are] really important if this technology is going to go anywhere.”
