According to Gary Gensler, the chairman of the Securities and Exchange Commission, the digital asset industry is plagued by fraudulent activities, scams, bankruptcies, and money laundering.
He has referred to scandals involving FTX, Three Arrows Capital, and other organizations, calling them “inevitable.” Gensler emphasized that despite claiming to operate outside of existing regulations, many entities in the industry end up in bankruptcy court.
He has reminded firms that they are still subject to traditional financial regulations and blamed the industry’s troubles on widespread non-compliance.
The official has stated that investors and issuers in the crypto asset market are entitled to the same protections as those in traditional securities markets.
He has highlighted the fact that Congress has defined a security very broadly, not just limited to stocks and bonds, but also including things like an “investment contract.”
The comments from Gensler has come after he faced tough questioning from legislators in September about the SEC’s stance on digital assets and the expected timing of the approval for a Bitcoin ETF.