The new head of the Securities and Exchange Commission said Friday that more investor protections were needed in the markets for bitcoin and other crypto assets.
Gary Gensler said on CNBC’s “Squawk Box” that he saw the attraction to bitcoin for traders but that regulation was needed to prevent fraud and other issues.
“It’s a digital, scarce store of value, but highly volatile,” Gensler said, talking about bitcoin specifically. “And there’s investors that want to trade that, and trade that for its volatility, in some cases just because it is lower correlation with other markets. I think that we need greater investor protection there.”
Gensler later qualified that he believed bitcoin was a “speculative” store of value and that the SEC should be “technology neutral” when it comes to new innovations in markets.
Bitcoin and other cryptocurrencies have boomed since late last year, fueled by increased institutional adoption for some of the more established coins and interest from retail traders.
Bitcoin was trading above $57,000 per coin on Friday after hovering under $10,000 a year ago, while dogecoin, a digital coin that started as a joke based on a meme with a Shiba Inu dog, was trading near its record high.
Gensler, who previously taught classes about blockchain and other financial technology at the Massachusetts Institute of Technology, said there needed to be authority for a regulator to oversee the crypto exchanges, similar to the equity and futures markets. He said that many of the crypto assets were trading like assets and should fall under the purview of the SEC.
“To the extent that something is a security, the SEC has a lot of authority. And a lot of crypto tokens — I wont call them cryptocurrencies for this moment — are indeed securities,” he said.
Gensler also commented on social media’s influence on financial markets.
“We need to update and freshen our rules to ensure that, while retail investors and any individual has first amendment rights to speak and so forth, that they’re not misleading the public, they’re not manipulating the public, manipulating the markets,” he said.