The Chairman of the United States Securities and Exchange Commission (SEC) – Gary Gensler – opined the turbulence in the digital asset market has not ceased with Terra’s fiasco. He predicted that a lot more coins will “fail,” which will harm an additional number of investors.
The Turmoil is Not Over Yet
The cryptocurrency market has significantly declined in the last few weeks. Bitcoin, for one, is down by over 25% in the past 14 days. However, all eyes were on Terra’s native token LUNA, which crashed from nearly $80 to less than a cent in a matter of days. The project’s algorithmic stablecoin UST lost its peg against the US dollar and is currently trading at $0.08, which many believe was the original source of the aforementioned crisis.
According to SEC’s Chair – Gary Gensler – crypto traders should be prepared to see other coins failing to virtually zero. Thus, they could lose their funds, while their confidence in the digital asset industry will be undermined:
“I think a lot of these tokens will fail. I fear that in crypto… there’s going to be a lot of people hurt.”
In addition, Gensler reiterated the SEC’s plans to put crypto platforms under strict monitoring. The agency insists that all trading venues be registered with the financial watchdog. Presumingly, this way, investors will have maximum protection when dealing with cryptocurrencies:
“They should move towards getting registered or, you know, we’re going to be the cop on the beat, and we’re going to bring the enforcement actions.”
Gary Gensler, Source: Bloomberg
SEC Hires More People to Strengthen Its Crypto Unit
Earlier this month, America’s top monetary regulator vowed to almost double the size of its Crypto Asset and Cyber Unit. It will be topped up with 20 experts, and the total number will surge to 50. The additional positions include staff attorneys, fraud analysts, supervisors, and trial counsels.
The main reason for such an expansion is to provide further protection for investors. Gensler commented at the time:
“By nearly doubling the size of this key unit, the SEC will be better equipped to police wrongdoing in the crypto markets while continuing to identify disclosure and controls issues with respect to cybersecurity.”
The agency emphasized that this division has resolved over 80 enforcement cases involving fraudulent cryptocurrency activities up to date. Those scams skimmed more than $2 billion from investors.