SEC’s Gensler Says Crypto, SPACs Need ‘Investor Protections’

Securities and Exchange Commission (SEC) Chairman Gary Gensler has confirmed in a hearing that the U.S. isn’t looking to ban cryptocurrencies, but he said he thinks they need “investor protections” — as do special purpose acquisition companies (SPACs).

“I am technology-neutral,” Gensler said in testimony before the House of Representatives Committee on Financial Services. “I think that this technology has been and can continue to be a catalyst for change, but technologies don’t last long if they stay outside of the regulatory framework. I believe that the SEC, working with the [Commodity Futures Trading Commission (CFTC)] and others, can stand up more robust oversight and investor protection around the field of crypto finance.”

He said there would be two tracks he would ask SEC staff to investigate: how the agency can work with other financial regulators to bring investor protection to the markets, and which gaps the SEC could fill.

In the testimony, Gensler said the SEC has several projects that apply to both tracks, including the offer and sale of crypto tokens, stable value coins, crypto trading and lending platforms, investment vehicles giving exposure to crypto assets, and custody of crypto assets.

He said platforms and projects should talk to the SEC, as several have dozens or hundreds of tokens on them, and whenever there are securities on trading platforms, they have to register with the SEC unless they qualify for an exemption.

As for SPACs, he said he has asked staff for recommendations on how to boost disclosures in those investments, as there are “a lot of fees and potential conflicts inherent within SPAC structures.” Because of that, he said he thinks investors need better information to understand the costs and risks.

Earlier this month, Gensler said crypto platforms that attract investors with the hope of returns will be regulated.

Read more: SEC’s Gensler Warns Crypto Platforms Suggesting Returns Subject to Oversight

He said several crypto platforms which have taken investors’ money in exchange for returns will have to look at the securities laws “carefully” and think about getting registered.