SEC could exempt crypto firms from some laws to help with compliance, says Chair Gensler

(Kitco News) The U.S. Securities and Exchange Commission Chair Gary Gensler said he could bend some laws for crypto companies to encourage compliance.

Wall Street’s top regulator said that it has that authority.

“We do have robust authorities from Congress to use our exemptive authorities that we can tailor” in terms of disclosure and investor protection, Gensler told Yahoo! Finance on Thursday.

Gensler added that a similar method is applied when dealing with compliance issues for asset-backed securities and equity offerings. “Just as there’s difference between asset-backed securities and an equity offering, there may be differences here as well,” he said.

The comments come as the crypto market continues to suffer from contagion risk following the massive selloff that saw $2 trillion wiped off crypto’s overall market cap since reaching record highs last year.

The interview also offered some insight into Gensler’s behind-the-scenes thinking around the future of the crypto space regulation.

The SEC chair once again called on crypto companies to come forward and begin the compliance process. Many firms in the space remain “non-compliant,” he added.

“There’s a potential path forward. I’ve said to the industry, to the lending platforms, to the trading platforms: ‘Come in, talk to us,'” Gensler said. “The public benefits by knowing full and fair disclosure and that somebody is not lying to them…basic protections and whether you’re buying a crypto token or a security such as equities or a security such as an asset-backed security, those basic disclosures.”

After the Terra blockchain collapse in May, the contagion risk has brought many crypto lenders to their knees. The latest company to file for Chapter 11 bankruptcy is Celsius Network. 

The crypto lender provided a high yield to customers who deposited their cryptocurrency. As of June, Celsius was able to amass more than $20 billion in assets by offering an 18% yield to depositors.

Gensler said the scheme was unrealistic when asked about these high yields. “If it’s too good to be true, then maybe it is. There may be a lot of risks embedded in that.”