The chair of U.S. Securities and Exchange Commission (SEC), Gary Gensler outlines his views on stablecoins, crypto regulation and potential SEC action going forward in an interview with Yahoo Finance.
Gensler firstly called out crypto lending platforms for offering unrealistic yield rates saying that ‘a lot of risk may well be embedded in that.’
He believes that these platforms offering rates anywhere between 4% to 20% are simply ‘sort of too good to be true type of returns.’
These comments come amid the current crypto market crash leading to several lending platforms such as Voyager Digital and Celsius closing shops.
Talking about stablecoins, Gensler says that they are ‘like a poker chip being used inside of the platforms.’ He points out that stablecoins are financial tools that enable the borrowing, lending, and trading of crypto assets without third-party intermediaries.
Stablecoins need to be regulated as part of an ecosystem lacking protection for investors and are prone to fraud and manipulation, according to the SEC Chair.
Gensler points out that the SEC has rules in place to determine what constitutes an investment company and to that end discusses the agency’s review of crypto lender BlockFi earlier this year.
BlockFi was found to be a non-compliant investment company and reached a $100 million settlement with the SEC and state regulators for offering high interest rates on cryptocurrency deposits.
Gensler talks about the current regulation discussions of SEC with exchanges, lending, and the broker dealers and several industry participants.
The SEC is simultaneously holding discussions with bank regulators and the CFTC, considering how Bitcoin and Ethereum might be classified as commodities (and thus come under the purview of the CFTC).
