The SEC Must Monitor Crypto Lending Firms, According to Gensler
The U.S. Securities and Exchange Commission (SEC) chairman, Gary Gensler, has called for more regulation. Gensler hinted that crypto lending companies could be forced to seek a license from the commission.
Crypto service providers have been increasingly under scrutiny from regulators in the past few days. The market collapse triggered by the Terra LUNA ecosystem bankruptcy has made most governments act strictly.
As a result, the SEC chair is voicing out the plan of his agency to bring crypto lending firms to account for their activities.
SEC Plans to Register Crypto Exchanges
According to Gensler, lending companies fall under the jurisdiction of the commission. The agency aims to take the necessary steps toward ensuring compliance from the digital asset service providers.
In an interview with CNBC, Gensler noted that the lending institutions for cryptocurrencies are investment corporations. These firms bring together bonds from hundreds of thousands of customers.
Gensler added that with the massive funds, the crypto firms have enough funds to lend to people and make profits.
By dealing with huge financial assets, the activities of the lending firms placed them under the control of the SEC. The SEC chair noted that their actions resemble those of banks or investment institutions.
Furthermore, Gensler disclosed that the firms often deal with customers’ assets and plunging the same for profits. The SEC aims to determine how such offers are designed and what makes them unique investment tools.
The commission wants to register all crypto lending firms under securities guidelines to regulate their activities. The regulator seeks to collaborate with the crypto industry to protect investors, added Gensler.
Gensler Keeps Mum on Celsius
In the interview with CNBC, Gensler was asked about his agency’s next line of action given the current bankruptcy claims of some exchanges. Celsius, in particular, was mentioned to the SEC chair, but he did not directly answer the question.
He noted that all crypto lending firms would subsequently fall under the purview of the SEC.
Given that Gensler did not talk about Celsius during the interview with CNBC, it is generally believed that the commission is handling the matter. According to Joseph Borg, the director of the Alabama Securities Commission, the commission is in touch with Celsius regarding its move to halt withdrawals.
In addition to Celsius, two firms nearby also filed for bankruptcy claims. On July 5, the loan company Voyager Digital announced it was going under. On July 1, the cryptocurrency hedge fund Three Arrows Capital filed for bankruptcy.
The commission has not announced what it intends to do following the bankruptcy claims. However, many industry players believe that the SEC has commenced an investigation into the activities of the firms.
The past 30 days have been tough for the crypto industry as the prices of digital assets continue to plummet. Most exchanges struggle to turn in profits when prices are at their lowest.
Meanwhile, the crypto market is steadily recovering after weeks of bottoming out and tanking.
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