Following the Terra and UST debacle and crypto meltdown, SEC chairman Gary Gensler sent a strong warning to crypto investors, emphasizing the lack of investor protections and calling it a “highly speculative asset,” rightfully so.
In an appearance at a FINRA conference, Gensler pointed out that crypto investors aren’t getting enough full disclosure on the assets they are holding. Following up on that point he went on to say that he believes cryptocurrencies should be regulated as securities in order to hold crypto organizations, such as Terra, accountable for carelessness and lack of disclosure.
“There’s supposed to be full and fair disclosure, and people aren’t supposed to lie to you. Right now, many of these entrepreneurs come up with an idea … and they want to raise money from you. That puts it inside of the securities laws.” Gensler stated.
Our opinion:
1. Gensler makes a good point on the need for regulation to make sure that cryptocurrency organizations are fully disclosing important information to investors.
2. Currently, many cryptocurrencies are speculative assets and as an investor it’s important to be smart and do your due diligence, weigh their risk and time horizon, and understand what you’re investing in.
3. Gensler makes another good point on crypto tokens that are very much securities and probably should be regulated as such, however, not all cryptos fall into the securities category so an overall classification of crypto as securities is not realistic or effective.