If crypto lenders operate more like investment firms, they must be registered as such, the head of the U.S. Securities and Exchange Commission (SEC) said on Thursday (July 21).
Speaking to CNBC, SEC Chairman Gary Gensler added that while major financial institutions are free to add cryptocurrency options to their client portfolios, the risks associated with crypto investing should be made public.
“We focused on this area because many of these businesses … could well be investment companies taking hundreds of thousands or millions of client funds, pooling them, then returning them while offering fairly high returns” , Gensler said. “It looks a bit like an investment company or a bank, you might say.”
He added: “How do they do this? What is behind these promises? We will work with the industry to get these companies duly registered under securities laws.
Read more: SEC Seeks Funding to Fix Crypto Problems
Gensler’s comments came two days after the chief of the SEC’s enforcement division told a House subcommittee that he needed more people to handle cryptocurrency shares. the agency — despite nearly doubling the size of the unit in May.
Testifying for the House Financial Services Subcommittee on Investor Protection, Entrepreneurship, and Capital Markets, Gurbir Gerwal said enforcement action against crypto companies was draining his resources, even though he had hired 20 new positions – lawyers, investigators and analysts – to increase the staff of the Crypto Assets and Cyber Unit to 50.
When a subcommittee member, Rep. Sean Casten, D-Ill., asked if Grewal had enough resources, the director suggested he needed more — a lot more.
“We are doing our best with the 20 additional slots,” he replied, “and we hope to get the 125 additional slots we requested.”
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