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Gensler warns crypto industry 'will not long persist' without investor protection

Gensler warns crypto industry 'will not long persist' without investor protection

The BlockThe Block2024/09/25 16:00
By:The Block

Quick Take In an interview with CNBC’s Squawk Box on Thursday morning, SEC Chair Gary Gensler asserted that the crypto industry needs disclosures and pointed to past turmoil in the market. Gensler also reaffirmed on Thursday that bitcoin is not a security.

U.S. Securities and Exchange Commission Chair Gary Gensler doubled down on his stance on crypto and warned that the field will not survive without vital investor protections. 

In an interview with CNBC's Squawk Box on Thursday morning, Gensler asserted that the crypto industry needs disclosures and pointed to past turmoil in the market. 

Multiple firms folded in 2022, including crypto exchange FTX , hedge fund Three Arrows Capital  and crypto lenders Celsius and Genesis , among others. FTX CEO Sam Bankman-Fried faced criminal charges and was ultimately sentenced to almost 25 years in prison for fraud-related charges. His counterpart, co-CEO of Alameda Research Caroline Ellison, was just sentenced this year for two years for her role in FTX's collapse. Former Celsius CEO Alex Mashinsky is awaiting his criminal trial set for early next year. 

"Look at the leading lights in this field, in the crypto field just two years ago. A number of them are in jail right now, and I'm not just talking about SBF [Sam Bankman-Fried]... there's been tens of billions of dollars of losses and bankruptcies and so forth," Gensler said on Thursday. "What innovative field in America survives without having building trust in that field and protecting investors or consumers?"

"This field will not long persist without investor protection or consumer protection," he later said. 

Gensler has also said that most cryptocurrencies are securities and has called for crypto platforms to register with the agency. On Thursday, he reaffirmed that bitcoin was an exception. 

"As it related to bitcoin, my predecessor and I have said that's not a security," Gensler said. "You now have a way that you can actually express that view — buy into that through exchange-traded products."

Trump or Harris

CNBC also asked for Gensler's thoughts on presidential candidates Vice President Kamala Harris and Donald Trump's views signaling more openness to crypto. Harris has said twice in the past week that her administration would "encourage innovative technologies like AI and digital assets while protecting our consumers and investors." 

Trump, meanwhile, has vowed to end an "unlawful and un-American crackdown" and recently unveiled his crypto project called World Liberty Financial, which has drawn some skepticism . Trump has also said he would fire Gensler if he is elected to a second term.

Gensler declined to comment on the elections. 

"On the policies, I think it's quite clear that investor protection helps build innovation. Innovation is compatible with investor or consumer protection, if it's about automobiles or cribs or anything else," Gensler added. "I think they complement each other."


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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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