U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler issued a stark warning to the cryptocurrency industry Thursday, asserting its long-term survival depends on robust investor protections. In an interview with CNBC’s Squawk Box, Gensler reiterated his concerns about the lack of regulatory oversight within the sector, highlighting the devastating consequences of recent market turmoil.
The past year has witnessed a string of high-profile collapses, including the spectacular implosion of FTX, the bankruptcy of Three Arrows Capital, and the downfall of crypto lenders Celsius and Genesis. These events, resulting in tens of billions of dollars in losses, have left investors reeling. The criminal prosecutions of FTX CEO Sam Bankman-Fried (sentenced to nearly 25 years) and Alameda Research co-CEO Caroline Ellison (sentenced to two years) further underscore the gravity of the situation. Former Celsius CEO Alex Mashinsky also awaits trial.
“Look at the leading lights in this field just two years ago,” Gensler stated. “A number of them are in jail right now, and I’m not just talking about SBF… there’s been tens of billions of dollars of losses and bankruptcies.” He emphasized the impossibility of any innovative industry thriving without establishing trust and safeguarding investors. “This field will not long persist without investor protection or consumer protection,” he concluded.
Gensler’s stance reflects his ongoing push for greater regulation within the crypto space. He maintains that most cryptocurrencies are securities and should be registered with the SEC, a position he reaffirmed on Thursday, while making an exception for Bitcoin. “As it relates to bitcoin,” Gensler clarified, “my predecessor and I have said that’s not a security. You now have a way that you can actually express that view — buy into that through exchange-traded products.”
