The head of the US Securities and Exchange Commission (SEC), Gary Gensler, believes the agency needs additional authority and resources to regulate the crypto industry. He wrote this in response to a request from Senator Elizabeth Warren.
Gensler sent her the letter on August 5, but Warren published it on the 11th, after the Senate sent the infrastructure bill to the House of Representatives without the cryptocurrency amendments.
The letter echoed statements made by the head of the regulator at the Aspen Security Forum 2021 event.
In a response to the senator, Gensler noted that crypto investors are not sufficiently protected. He explained that the digital asset market is made up of centralised and decentralised platforms where users can trade, lend or borrow tokens.
Most of these assets, in his view, are unregistered securities.
"I think these platforms may be subject to securities laws, for some of them there may also be mandatory regulations on exchange-traded commodities and banking. This raises many questions about investor and consumer protection, taking action against illegal activities and ensuring financial stability," the SEC chief wrote.
Gensler singled out the stabelcoin market, with a combined value of more than $110 billion, as a separate issue. Three-quarters of cryptocurrency trading volume was accounted for by "stablecoin" pairs in July, he said.
Stablecoins could potentially be used for money laundering, tax evasion, financial sanctions circumvention and other illegal activities, he said.
"I believe we need additional powers to prevent transactions, products and platforms from falling into regulatory breaches. We also need more resources to protect investors in this growing and volatile sector," stressed Gensler.
He singled out cryptocurrency trading, lending and DeFi as priority areas for lawmakers to work on.
Recall that Gensler took over as head of the SEC in April 2021. In May, he called on Congress to bring clarity to the regulation of the crypto industry.
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