SEC Chief Gensler Says More Crypto Failures Likely

  • SEC Chairman Gary Gensler sees more failed tokens and less confidence in cryptocurrencies following the collapse of TerraUSD.
  • Gensler, an advocate for cryptocurrency regulation, said more investors would be harmed, the WSJ reported.
  • Stablecoin TerraUSD and sister token luna collapsed last week as the cryptocurrencies lost more than $1 trillion in market value this year.

Securities and Exchange Commission Chairman Gary Gensler expressed his concerns about cryptocurrency markets following the collapse of large stablecoin TerraUSD and its backing cryptocurrency Luna this month.

Speaking to reporters after a House Appropriations Committee hearing on Wednesday, Gensler said, “I think a lot of these tokens will fail,” the Wall Street Journal reported Wednesday.

“I’m afraid that in crypto… a lot of people will be hurt, and that will undermine some of the trust in the markets and the trust in the markets on a large scale.”

TerraUSD and luna plummeted last week after the former, an algorithmic stablecoin, lost its 1:1 peg to the US dollar and both dropped to zero. The free fall of the two tokens is estimated to have wiped out more than $50 billion in paper value, Insider reports.

“THE


volatility

in crypto markets in recent weeks highlights the risks to the investing public,” Gensler said.

“The highly volatile and speculative cryptocurrency market has grown rapidly, attracting tens of millions of American investors and traders,” he said.

Last year, Gensler compared the cryptocurrency market to the “Wild West” and said the SEC needed greater regulatory authority over it. He also said that the cryptocurrency would only become popular if clearer rules were in place.

Earlier this month, the SEC said it had nearly doubled the size of its crypto asset holdings unit, adding 20 additional positions to the group “responsible for protecting investors in the cryptocurrency markets and from cyber threats.”

“The US has the biggest capital markets because investors have faith in them, and as more investors access cryptocurrency markets, it is increasingly important to dedicate more resources to protecting them,” Gensler said in a press release.

See More information: Analysts at JPMorgan say the cryptocurrency crash is not yet a repeat of the winter of 2018. They explain why market conditions can still bring “significant upside” despite reversing institutional demand – and share tokens benefiting from the land collapse

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