Gensler, SEC chairman is increasing his criticism of digital-asset exchanges. He argues that some platforms are flouting rules and may even be wagering against their clients.
Gensler has underlined that digital assets fall under SEC’s jurisdiction. Thus, exchanges that trade them should register with them. Besides, the Securities and Exchange Commission (SEC) is also increasing its enforcement efforts.
Speaking in the media, Gensler expressed his concern about the conduct of some Exchange sites. He noted that crypto exchanges are failing to separate the components of their firms. In most instances, they end up operating beyond their scope. He stated that the “commingling” of services might not be in the clients’ best interests.
Gensler remarked on the digital currency market saying that crypto has a lot of similar challenges–platforms trading ahead of their clients. He also added that they trade against their clients because they are market-marking against their customers.
Gensler maintains all stablecoins are linked to exchange sites
Additionally, the Securities and Exchange Commission expressed concerns about stablecoins. Stablecoins are digital assets often tethered to the dollar or another fiat currency. SEC stated that the three largest stablecoins (Tether, USD Coin, and Binance USD) are linked to crypto exchanges.
I don’t think it’s a coincidental occurrence,
Gensler stated. He continued, referring to anti-money laundering and know-your-customer procedures.
Trading platforms found each of the three major ones Stablecoins. Their role was to ease trading on those platforms while avoiding AML and KYC,
he said.
Tether is the world’s largest stablecoin with a market capitalization of $83 billion. Details reveal that Tether has ties to the individuals behind the Bitfinex crypto exchange. USDC, which is among the important cryptos, is under a consortium of companies, including Coinbase Global Inc. Besides, Binance, the largest cryptocurrency exchange globally, is linked to Binance USD.
The Binance stablecoin responded to Gensler’s comments by referring to a blog post. The blog post indicated that Binance stablecoin follows tight criteria. Besides, they always maintain honesty with the user community. Coinbase declined to comment. Yet, Bitfinex did not respond to a request for comment right away.
Coinbase’s stock fell on Tuesday after the firm reported quarter one revenue. The volume fell short of expectations and cautioned that trade volumes in the current quarter would be lower than in the previous quarter. Bitcoin has lost more than half of its value since reaching an all-time high in early November.
Stablecoin concerns are beginning to emerge
Concerns about stablecoins have also risen in recent weeks on Capitol Hill. The concerns are up following the loss of the stablecoin TerraUSD, better known as UST, from its dollar peg over the weekend.
UST is a so-called algorithmic stablecoin. It is not backed by physical assets such as cash or cash equivalents but rather by algorithms. This is because it relies on trading and treasury management to keep its value stable.
During a recent interview, Senator Mark Warner made some critical remarks. He stated that the entire experience highlights the need for “some sort of structure.” The senator noted that structures would guarantee investors that stablecoins are, in fact, stable. He added that they require some sort of structure.
In the words of Senator Mark Warner, a Democrat from Virginia,
Perhaps this turbulence in the industry may help to take some air out of this enormously inflated balloon.
Stablecoins also raise issues about illegal finance and pose threats to financial integrity, including worries about adherence to anti-money laundering (AML) and counter-terrorist financing (CFT) regulations and concerns about proliferation.
Bitcoins and other cryptocurrencies have experienced wild price swings, making them unsuitable for business, trade, payments, and a reserve currency. Stablecoins are intended to mitigate the problem.
SEC’s concern can not be treated casually. Their responsibility is to ensure adherence to regulations and consumer safety.
Source: https://www.cryptopolitan.com/gensler-crypto-platforms-are-hurting-clients/