On September 14th, the new chair of the Securities and Exchange Commission, Gary Gensler, appeared before the Senate Banking Committee to talk about how his agency planned to handle the financial markets during his term. He praised the American financial system, discussed the future of corporate bonds, and ruminated on how the rules of the stock market might be modified to make it more efficient. Soon, he turned to cryptocurrency markets, which are notoriously volatile, and adopted a darker tone. “Frankly, as I’ve said before, I think it’s more like the Wild West,” Gensler said. On another occasion, he had described cryptocurrency investments as “rife with fraud, scams, and abuse.”

Gensler’s comments came after several years of a fraught relationship between the agency he now heads and the market for digital coins, tokens, and virtual currencies such as bitcoin, which are created using cryptography, and many of which reside on giant, decentralized electronic ledgers that use blockchain technology. The S.E.C. has so far failed to keep up as thousands of tokens and digital currencies have been introduced, and new companies and platforms have emerged to help store and trade them. The lack of regulations over this burgeoning area has created an opening for widespread fraud; in May the Federal Trade Commission reported that consumers lost more than eighty million dollars on cryptocurrency-investment scams between October, 2020, and March, 2021, more than ten times the amount lost during the same period in the prior year.
Source…