U.S. SEC Chair Says Much to be Done to Protect Crypto Investors

Cryptocurrency assets are extremely speculative, and investors need greater safeguards or risk losing faith in the markets, according to Gary Gensler, head of the US Securities and Exchange Commission.

Individuals who acquire cryptocurrencies don't often receive the same disclosures that people who buy traditional assets get, such as whether the trading platform they're using is trading against them or if they genuinely control the assets they keep in digital wallets, according to Gensler.

"We have this fundamental bargain: you, the investing public, may choose the risk you want to take, but there has to be full and fair information, and individuals aren't meant to lie to you," he said at the Financial Industry Regulatory Authority's annual conference in Washington.

His remarks follow the dramatic fall of TerraUSD, a so-called stablecoin that lost its dollar peg last week.

The fall of the token sent cryptocurrencies sliding, with bitcoin erasing the gains it had made over the weekend to trade around $30,000, considerably below its November 10 high of $69,000.

While crypto markets are considered to be decentralized, most activity takes place on a few trading platforms, which, together with token issuers, must engage with the SEC to tighten industry regulations and disclosures, according to Gensler.

"Anti-fraud, anti-manipulation, ensuring sure there's no front-running, making sure an order book is truly true and not made up," he said of core market principles.

According to Gensler, the SEC would remain "a policeman on the beat" while working with the Commodity Futures Trading Commission to ensure that all cryptocurrencies are protected.

"There's a lot to be done here, and the investing public isn't effectively protected in the meanwhile," he added.