The US Security and Exchange Commission (SEC) chair Gary Gensler has released a new round of criticism against cryptocurrency exchanges and the way they operate.
In his latest scathing rhetoric, Gensler argued that many exchanges have been found to “work and trade against their customers”.
Gensler once again reminded crypto investors and companies that their operations are under SEC’s purview and that those that choose to trade in digital currencies must be registered with the watchdog.
Speaking to Bloomberg News, Gensler said that the SEC was worried that cryptocurrency exchanges aren’t doing enough to protect their customers.
In fact, he said there wasn’t clear differentiation between crypto businesses’ divisions, citing market-making, trading and custody as good examples of what he meant. This type of “mingling”, the chair added, was not in the customers’ best interests.
Many exchanges are “trading ahead” of their customers and as such, they are putting customers in a difficult spot. Gensler raised various other issues during the interview, including SEC’s position on stablecoins.
Stablecoins, while ostensibly a safe option, could cause disruption in mainstream finance, precisely because they do not have a tangible value backing them up, Gensler said. Yes, they are affiliated to the US dollar in the case of USDT, but this is in itself not an assurance of long-term stability.
There are also other reasons for concern. According to Gensler, Tether has ties to Bitfinex and USDC is issued by a consortium that includes companies such as Coinbase Global Inc. Binance is connected to Binance USD creating a sort of thin-ice regulatory environment.