But the SEC’s authority doesn’t extend to cryptocurrencies, including bitcoin, which is “a scarce store of value but highly volatile,” said Gensler. “There are investors who want to trade bitcoin because of its volatility and in some cases because of its lower correlation with other assets… I think we need greater investor protection there.” Currently the Commodity Futures Trading Commission (CFTC) has limited anti-fraud and anti-manipulation authority over cryptocurrencies like bitcoin, which accounts for about half of a $2 trillion market, and the SEC has some authority over crypto tokens, which are securities, Gensler said. He noted that the prior administration of the SEC brought enforcement actions involving those securities or investment contract tokens, bringing them under the rules of the agency.
Gensler’s position does not appear to bode well for approval of the multiple Bitcoin ETF applications pending before the agency. At least three are under active consideration by the agency. Last week, the SEC postponed a decision on the VanEck Bitcoin ETF until mid-June. Gensler recalled the regulatory regimes put in place in the 1930s after the stock market crash and during the Great Depression ”to help protect against fraud and manipulation on the exchanges and to protect the integrity of the financial system… I think that that’s really something we’ll be working with Congress and if they see fit to try to bring some protection for people that want to invest in this speculative asset class.”
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