Evan Vucci/Associated Press
- SEC Chairman Gary Gensler said that the SEC and FINRA have to be prepared to fight crypto cases.
- At the annual FINRA conference, Gensler said tighter regulations would help protect investors.
- Earlier this year, SEC "crypto mom" Hester Peirce presented a safe-harbor policy to ease regulatory pressures on crypto firms.
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The Securities and Exchange Commission will tackle bad actors in crypto and has to be prepared to make cases against them to protect investors, chairman Gary Gensler said at the annual FINRA conference on Thursday.
"The SEC and FINRA should be ready to bring cases involving issues such as crypto, cyber, and fintech.", Gensler said in his remarks at the conference, indicating that the SEC would crack down on misconduct in the crypto industry.
At the end of 2020, the SEC sued Ripple, a global payments firm that works with blockchain technology, and two of its executives. The SEC said they had raised $1.3 billion by selling the cryptocurrency XRP as an unregistered securities offering. The case is still ongoing and the company's management has repeatedly denied any wrongdoing.
"We need to do whatever we can to ensure that bad actors aren't playing with working families' savings and that the rules are enforced aggressively and consistently," Gensler said.
He reiterated the SEC would go after misconduct in all areas of the financial system. This could include "deceptive conduct by private funds, offering or accounting frauds, insider trading, market manipulation, failures to act in retail customers' best interests, reporting violations, best execution and fiduciary violations", according to the SEC chairman.
Alongside equities markets, climate change, market transparency and human capital, crypto and the gamification of investing - which is often associated with the rise in retail and crypto investing during the pandemic - were areas that Gensler would seek to address, he said.
Regulations and their enforcement are key in achieving the SEC's mission of encouraging the creation of capital, ensuring investors' safety and maintaining "fair, orderly, and efficient markets," Gensler said. "We need rules of the road and a cop on the beat," he continued.
Rules are there for a reason and bending them was not in the interest of consumers and could cause more harm than good, Gensler told the audience.
The SEC is considering regulatory approaches towards crypto, amongst them the safe-harbor policy proposed by crypto-friendly SEC commissioner Hester Peirce, nicknamed 'crypto-mom'. Her policy would give crypto asset and fund issuers a three-year grace period in which crypto tokens would not be classified as securities.
In March, Peirce said she hoped crypto regulation would progress in 2021, as regulatory bodies were too focused on the illicit activities linked to crypto technology, rather than the benefits and she hoped to collaborate with then newly installed chairman Gensler on this.