Crypto trading and lending platforms should offer customers similar protections to exchanges, warns SEC Chairman Gary Gensler

Crypto trading and lending platforms should offer customers similar protections to exchanges, warned Gary Gensler, chairman of the U.S. Securities and Exchange Commission.

Gensler made the comments after several major crypto companies crashed as the price of digital assets plummeted. Earlier this month, digital asset broker Voyager Digital and lender Celsius successively filed for bankruptcy protection in the United States, leaving millions of users unable to access their funds on the platforms.

“I have asked our staff to work directly with [crypto] platforms to get them registered and regulated like stock exchanges, and to make sure those crypto tokens also enter and register where appropriate, as securities,” Gensler said in a video in the series. Office Hour” Thursday.

What cryptocurrencies qualify as securities has long been debated as a key issue around the regulation of digital assets. More recently, Coinbase Global COIN,
would be investigated as to whether it allowed investors to trade digital assets that should have been registered as securities, according to a Bloomberg article.

On July 21, the SEC announced insider trading charges against a former Coinbase product manager, for allegedly telling his brother and a friend about planned asset listings on the exchange before they were made public. Although the agency did not accuse Coinbase of any wrongdoing, it said nine of the 25 crypto assets involved in the case were securities, while seven of the nine tokens were listed on Coinbase.

Lily: Coinbase and Flexa Challenge SEC Claims These 9 Cryptocurrencies Are Securities

By investing in crypto platforms, investors are “literally handing over the keys to your crypto,” Gensler said. “Imagine this, imagine putting all your stocks on the New York Stock Exchange. It would never fly.

Under certain circumstances, crypto trading platforms can also act as market makers, unlike traditional stock exchanges, Gensler said. “Exchanges don’t do this, they are not their own market makers because it creates inherent conflicts of interest. So, again, I asked staff to consider whether it would be appropriate to separate market making functions on these crypto platforms,” according to Gensler.

Hear Mike Novogratz at the Best New Ideas in Money Festival on September 21-22 in New York City. Galaxy Digital CEO has ideas for navigating the crypto winter.

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