Gary Gensler compared Crypto companies as a type of Casino businesses and criticised it as a wild west.
Gary Gensler is Chairman of the United States Securities and Exchange Commission (SEC). Perhaps Gensler is a blockchain technology lover & in the past he taught college students about Bitcoin & blockchain technology but after joining the SEC agency he became a Crypto hater. In short, the SEC boss has opposed the Crypto companies & Crypto projects which don’t follow Securities laws despite providing services with assets, which possess a nature more likely to Security.
Recently Gary Gensler spoke with Bloomberg and talked about the Crypto companies’ Proof-of-reserves (PoR) following FTX’s downfall.
Gensler said that Crypto companies are doing work more likely to casinos. He said:
“The runway is getting shorter. The casinos in this Wild West are non-compliant intermediaries.”
Further, Gensler noted that Crypto companies’ PoR reporting doesn’t show significant safety of the user’s fund because PoR is neither a full accounting of the assets and liability of a company nor does it satisfy segregation of customer funds under the securities laws.
Gensler also suggested that regulatory bodies should focus on forcing the crypto companies to report their PoR separately, where they can clarify the company’s fund & user funds easily. According to the SEC boss this way will help the crypto investors to get confidence that their crypto funds are there.
“They should do that by coming into compliance with time-tested custody, segregation of customer funds rules, and accounting rules,” the SEC boss explained.
In the past few weeks, the majority of the top Crypto companies reported their PoR in order to bring confidence among the customers that their funds are safe & they can withdraw at any time.
After the downfall of the FTX crypto exchange, Ethereum co-founder Vitalik Buterin proposed an idea for the crypto exchanges to introduce an open-source protocol for the crypto companies to add to their platform as a default feature, to show the companies’ user fund holding.
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