The head of the U.S. Securities and Exchange Commission (SEC) is issuing a warning to traders on the unregulated nature of the crypto industry after crypto lending platform Celsius (CEL) halted withdrawals amid potential insolvency.
In a new interview with the Wall Street Journal, SEC Chairman Gary Gensler warns investors that when they put crypto assets onto an exchange or lending platform, they are technically giving up ownership of their coins.
“If you basically are using a crypto exchange and many of the crypto lending platforms, they actually own your assets in some joint omnibus account on what’s called the underlying blockchain, this underlying accounting ledger you’ve maybe heard about.
And then you see things like this weekend and Monday where one crypto exchange and one crypto lending platform said ‘you can’t withdraw, not now.’ That happened in the middle of the meme stock circumstance as well, but there were protections on that fateful Friday in January of 2021.
There were protections around customer segregation, about the assets, you couldn’t trade unless they were clearly your assets. Here in crypto exchanges and lending, we should be able to bring those same protections and make sure that those protections are there but they aren’t there right now.”
Gensler goes on to say there’s a way forward for crypto lending platforms to become regulated and ensure their customers are protected.
“There’s a potential path forward on the crypto lending platforms. The crypto trading platforms also are sort of looking at that and saying ‘what do we do until those tokens themselves are registered?’
And so we have about six projects that we’re working through, trying to get registered crypto markets. To get them registered. They have hundreds, if not many hundreds of potential securities on their platforms, but also they’ve got an eye on how those tokens actually make disclosures to the public.
And also some of the tokens are commodities tokens and we work with our sister agency, the Commodities Futures Trading Commission (CFTC).”
Celsius Network paused all withdrawals and trades over the weekend citing market volatility. Its native token, CEL, plummeted 57% after the announcement and was at one point 99% down from its all-time high. Celsius Network has since recovered slightly and is changing hands at $0.59.
Securities and Exchange Commission Chairman Gary Gensler speaks with WSJ’s @charlesforelle about key aspects of the agency’s ambitious agenda https://t.co/40z90jF6X3
— The Wall Street Journal (@WSJ) June 14, 2022
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Source: https://dailyhodl.com/2022/06/15/after-celsius-troubles-sec-boss-gary-gensler-issues-warning-on-dangers-of-unregulated-crypto-industry/