SEC Chairman warns of 'too good to be true' returns amid market downturn

Gary Gensler, Chairman of the United States Securities and Exchange Commission, or SEC, reiterated his call for the protection of investo...


Gary Gensler, Chairman of the United States Securities and Exchange Commission, or SEC, reiterated his call for the protection of investors in securities offered by crypto companies.

Speaking virtually at the Robert F. Kennedy Human Rights Compass Investor Conference on Tuesday, Gensler said the SEC would use its existing authority to focus on cryptocurrency projects and exchanges, warning people of potentially “too good to be true” returns on investments. According to Gensler, most of the tokens in the crypto market today fall within the regulatory jurisdiction of the SEC, subject to the same disclosure requirements as securities.

“We reviewed these lending platforms – they work a lot like banks,” Gensler said. “They say, ‘Give us your crypto. We will give you a big feedback” [….] How can someone offer 4.75% on the market today and not disclose a lot? »

The SEC Chairman added:

“If it sounds too good to be true, it might just be too good to be true.”

SEC Chairman Gary Gensler speaking at the Compass Investor Conference on Tuesday

In response to a question about recent crypto market volatility, Gensler said he continues to be “intrigued by the technology,” but did not directly answer whether the SEC would approve a bitcoin (BTC) exchange-traded fund in the near future. He added that most projects in the crypto space were “prone to fail,” reiterating his warning of high returns without proper public disclosure.

Related: SEC Chairman: Retail Crypto Investors Must Be Protected

SEC Chairman’s remarks followed Senators Cynthia Lummis and Kirsten Gillibrand propose a bill which, if passed, would give the Commodity Futures Trading Commission “clear authority over applicable digital asset spot markets” as opposed to the SEC. The two U.S. lawmakers met with Gensler in June to discuss finding the best balance of regulatory authority between the CFTC and the SEC over cryptocurrencies.

Many players in the crypto space have criticized the lack of regulatory clarity in the United States, which may be subject to interpretation by several government agencies. Gensler has many times called on crypto projects to register with the SEC in order to protect investors.