Gensler Says SEC Should Regulate Crypto Lending Companies
The SEC chair has indicated that the regulator is watching the crypto lending space very closely.
Key Takeaways
- SEC chair Gary Gensler told CNBC today that crypto lending firms fall under the scope of the securities regulator.
- He noted that crypto lending firms offer returns as high as 10% and compared those firms to investment companies.
- Gensler did not directly comment on Celsius' failure, though earlier reports suggest the SEC is looking into the matter.
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SEC chair Gary Gensler says that crypto lending companies could be compelled to register with the SEC.
SEC Aims to Register Lending Companies
The chair of the SEC says that lending firms fall under its purview.
Gary Gensler told CNBC that cryptocurrency lending firms “may well be investment companies hundreds of thousands or millions of customer bonds, pulling it together and then re-lending it.” Those activities most likely bring the companies under the purview of the SEC. Gensler commented: “It sounds a little like an investment company, or a bank, you might say.”
Gensler added that lending firms are offering returns as high as 10%. He says that the SEC aims to find out how companies make such high offers and “what stands behind those promises.” To that end, the SEC aims to have crypto lending companies register under securities laws. The regulator will work with the crypto industry to protect the public, Gensler says.
Gensler Made No Comment on Celsius
CNBC asked Gensler whether the SEC would pursue a “litany of these type of settlements and deals” given the recent failure of Celsius, which filed for bankruptcy this month.
Gensler did not directly answer that question but gave the explanation above, implying that all cryptocurrency lending firms could fall under the scope of the SEC.
Though Gensler did not discuss Celsius specifically, the SEC is likely investigating the firm. Alabama Securities Commission Director Joseph Borg said in June that the SEC is in contact with Celsius over its decision to suspend withdrawals.
Two firms adjacent to Celsius have also failed: lending company Voyager Digital filed for bankruptcy on July 5, while crypto hedge fund Three Arrows Capital filed for bankruptcy on July 1. The SEC has not publicly announced an investigation into either company since those dates.
Disclosure: At the time of writing, the author of this piece owned BTC, ETH, and other cryptocurrencies.
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