In a Washington Post Live interview, SEC Chair Gary Gensler asserted that should China not comply with the auditing processes of the Public Company Accounting Oversight Board in the next three years, the SEC will suspend from trading the approximately 270 China-related companies raising money in the U.S. In response to recent developments in the Chinese real estate sector, Mr. Gensler said that it is possible the U.S. markets will react to an economic shock emanating from another country, but that the post-2008 financial crisis reforms put the U.S. in a better position to absorb those shocks.
On cryptocurrencies, Mr. Gensler stated that new technologies cannot exist for long outside of public policy frameworks. He said that there is no "long-term viability for five- or six thousand private forms of money," and that cryptocurrencies should be subject to the SEC's investor protection regime in the event of significant loss. He added that the agency has "robust authorities" to regulate cryptocurrencies, and that trading, lending and staking platforms should register with, and be regulated by, the SEC.
Mr. Gensler argued further that the "broad brush" of the U.S. securities laws means that trading and lending platforms with thousands of tokens, some of which take the form of a security (e.g., an investment contract, note, equity or bond), are likely within the scope of the securities laws' application. Mr. Gensler emphasized that further congressional help should center on interagency coordination of cryptocurrency regulation, particularly among the SEC, CFTC and the prudential regulators.
Mr. Gensler also mentioned that the SEC's report on the GameStop event can be expected "pretty soon," confirming that the report is currently in front of the SEC Commissioners.
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