SEC boss is working to register crypto lending firms to ‘protect the public’

The United States Securities and Exchange Commission (SEC) chairman said that the agency is actively seeking to get some ‘so-called’ cryptocurrency lending organizations legally registered if they operate more as investment firms.

Speaking in an interview with CNBC’s Squawk Box on July 21, SEC Chairman Gary Gensler stated that it was up to large financial institutions to decide whether or not they wanted to include cryptocurrency options in their portfolios for their customers, but that it was necessary to make the potential risks associated with cryptocurrency tokens public.

The chairman opined: 

“Many of these firms like Blockfi that settle may well be investment companies taking hundreds of thousands or millions of customers funds, pulling it together and then re-lending it.”

He added:

“It sounds a little like an investment company or a bank, and some of these offer pretty high returns 4%, 8%, 10% returns, and how are they doing that what stands behind those promises. So we will work with the industry to get these firms properly registered under the securities laws and protect the public.”

Gensler on whether crypto should be in a 401(k)

When the chairman was asked if cryptocurrencies ought to be included in people’s 401(k) plans and whether they need to be included in people’s portfolios, he responded:

“I’m neutral about the technology but not neutral about the investor protection. These are highly speculative asset class.”

Gensler stressed that there are thousands of tokens, most of which have properties similar to securities. He noted that many new businesses and creative endeavors end in failure, and the venture capital sector is no exception.

“It’s important that the public get the disclosure, understand the risk, there’s significant risk in this field.”

Several organizations dealing with cryptocurrencies, including the lending platform Three Arrows Capital (3AC), Celsius, and Voyager Digital, have either gone bust, filed for bankruptcy or had to suspend withdrawals. 

In general, many organizations have been pressured into reorganizing their business operations in order to better navigate the turbulent market.