SEC Chairman Warns of Crypto Investing Risks, Here’s Why

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One of the forces you should not ignore as a crypto investor is the Security and Exchange Commission, SEC. The body is doing everything it can to regulate crypto or suppress the industry if possible. Unfortunately, many digital operators, including network founders, exchange companies, and even top space executives, have had issues with the commission.

For example, Ripple has been battling with the SEC since 2020. Additionally, other operators such as Binance came under scrutiny from the SEC in 2022 as the commission began investigations into BNB. According to the commission, the goal is to determine if the token is unregistered.

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Apart from these two, many others face a problem from the commission in their attempt to protect investors from losses. So, no one is surprised by the SEC Chairman’s recent speech that crypto investors should be careful about the risks of the sector.

Gary Gensler is responsible for creating regulations to protect the interests of investors. The president is unhappy with the continued bear market in the sector. As such, it warns investors to be careful with crypto investments. In Gary Gensler’s keynote, the SEC has issued 23 regulations for the digital asset industry and is awaiting approvals.

In early February 2022, Gensler disclosed that the SEC and CFTC (Commodity Futures Trading Commission) were working together to achieve crypto regulation. He also said that the SEC plans to work with many crypto exchanges, lending platforms and other operators to ensure investor protection.

Gary Gensler Encourages Crypto Investors About Full Disclosure

According to Gensler, investors operating in the crypto industry should be made to understand the risks associated with their investments. He reiterated that they should understand the difference between equity offerings and asset-backed securities. By clearly disclosing the differences, investors can decide whether or not to invest.

As for the general public, they should be protected whether they are buying digital coins as asset-backed securities or as securities. He also disclosed that the US SEC allows US investors to take risks. But operators must disclose all information, whether selling financial assets or raising funds from the public.

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Given the recent losses and bankruptcies in the crypto market, these statements could not have been more appropriate and timely. The crypto community has been through a lot since the market crashed until now. Many stock exchanges even prevented investors from withdrawing their funds to avoid insolvency.

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On all of these issues, Gary Gensler believes that the lack of compliance in the industry has contributed to the losses. He also stated that Bitcoin is not a security because no entity issued it. Therefore, the SEC Chairman’s position on the losses is understandable.

From all indications, many cryptos that crashed were not compliant with regulations. Also, there has been no adequate disclosure by their operators. As such, people have invested money in such ventures without proper fund assurance.

Featured image from One News Page, chart from TradingView.com
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