Speaking in his testimony to the Senate Banking Committee, SEC Chairman Gary Gensler highlighted the issues regarding investor protection in crypto.
Gary Gensler stated before the Senate Banking Committee that the lack of Investor protection in new techs such as crypto and blockchain is something that the SEC cannot ignore in any way when applying regulations. Gary specifically stated that there isn’t any sort of investor protection when it comes to working in the crypto space. Investors are basically taking huge risks in activities such as trading, lending, and issuance, and the situation seems to be similar to that of the “Wild West” or the space of “buyer beware” that was present back when financial laws weren’t implemented. He also said that the asset class is in common with illegal actions such as fraudulent activity, scamming operations “and abuse.”
Additionally, Gary highlighted the massive rise of investors filling up the financial space, increasing to new record levels of activity. He mentioned that in order to provide sufficient protection to all these new and present investors, the SEC would need to be provided with more sufficient resources in order to handle such a large base, as nearly 4% of the employee base in the SEC has dropped since the past few years.
As for the Senators, they were still not in line about the best ways to handle this hugely growing new crypto industry and how to protect investors in the cryptocurrency sector. Senator Pat Toomey stated that he thinks that the SEC is not supposed to make investing difficult, challenging, or increasingly expensive and that American investors have the freedom to put their money wherever they desire.
Senator Elizabeth Warren mentioned that the high gas fee of Ethereum is a huge problem for minor investors, which means that these changing fee values can result in small investors getting crushed and be forced to move out entirely. Senator Elizabeth Warren also questioned the financial inclusion referred by advocates, saying that the SEC needs to work harder to ensure that a proper financially inclusive system is implemented.
Congress wants More
Gary stated that Coinbase has a massive market value but does not have any registration in multiple locations, which stops it from being a registered entity. In the end, Gary said that it is the investors’ choice on what risks they take. However, congress wants to trade it to be fair in all of the space.