SEC Chair Gary Gensler Now Targeting Crypto Exchanges For ‘Trading Against Customers’May 12, 2022 3:40 pm
With the recent plunge in the crypto markets over the past week, regulators in the US are now using it as reason to continue to double down on the crypto industry.
SEC Chair Gary Gensler just announced that the SEC will now be targeting crypto exchanges for supposedly trading against their customers.
The accusation here is that the crypto exchanges themselves are trading ahead of the customer’s orders which is typically something not allowed on traditional exchanges.
Gensler then decided to focus on the major stable coins that are typically used by exchanges such as Binance USD, USD Coin, and Tether.
The potential claim here by the SEC is that these might have been created in order to help the exchanges avoid certain Know-your-customer laws.
— Jacquelyn Melinek (@jacqmelinek) May 11, 2022
“Each one of the three big ones were founded by the trading platforms to facilitate trading on those platforms and potentially avoid AML and KYC,” Gensler said, referring to anti-money-laundering and “know your customer” regulations applied to financial transactions.
The SEC revealed its plans to double the size of its Crypto Assets and Cyber Unit just last week, and Gensler’s comments come during a time of heightened scrutiny for stablecoins in particular, catalyzed in part by the rapid decline of Terra’s UST stablecoin.
U.S. Treasury Secretary Janet Yellen also pushed for more crypto regulation in her annual testimony in front of the Senate Banking Committee yesterday, saying it would be “highly appropriate” for stablecoins specifically to be regulated by the end of the year.
Currently, stable coins play a massive role when it comes to crypto exchanges and account for a very large percentage of the total crypto market cap.
Just with those three stable coins mentioned, their combined total market cap currently amounts to 10% of the total crypto market cap which sits at $1.4 trillion right now.
In particular, Tether is currently the largest stable coin and has a $83 billion market value.
As far as future plans go, it seems that the SEC is set on continuing to expand their regulatory authority on crypto exchanges this year.
For the crypto community however, investors are worried that the SEC will continue to overstep their boundary by declaring which assets are considered securities and which are not.
SEC chairman Gary Gensler criticized crypto exchanges this time. Gensler said that the exchanges made transactions against their customers and users, and that these companies should be affiliated with the SEC in order to avoid these situations.
so now you have it 😅✌ https://t.co/QgfPKmGr5I
— $HIBILIA ♡ (@SHIBAINUCRYPTON) May 11, 2022
In response to Gensler’s comments, Binance refers to a blog post it assured the exchange’s stablecoin complies with “strict guidelines and remaining transparent with the user community.” While Bitifinex didn’t respond immediately and Coinbase refused to say something.
Earlier in January, the Chairperson suggested that crypto companies should face broad scrutiny at the hands of financial watchdog. In addition, the regulators should directly handle such crypto exchanges to ensure investors’ protection.
I’ve asked staff to look at every way to get these platforms inside the investor protection remit. If the trading platforms don’t come into the regulated space, it’d be another year of the public being vulnerable.
The news of additional regulation may be another contributing factor for the recent overall market slump, but some suspect that this may just be a convenient crisis to be used as a reason to control the crypto industry more.
The U.S. SEC Chair Gary Gensler criticized stablecoins and digital asset exchanges for trading against their customers. This criticism comes at a low point for the crypto market which is currently going through a rough patch. # # # # # # # # # #https://t.co/yLz9g3SFoM
— 🚀 Kryptomaniak is one of the many $cult $cyop (@KRYPTOMANIAK_) May 12, 2022
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