The US Securities and Exchange Commission is in the process of Registering Crypto-Lending Companies.

The US Securities and Exchange Commission is in the process of Registering Crypto-Lending Companies.

 

The chairman of the Wall Street regulator told CNBC in an interview on Thursday that the US Securities and Exchange Commission (SEC) is attempting to get some crypto lending companies properly licensed if they function more like investing firms.

 

Gary Gensler, the chairman of the SEC, also stated that although it was up to major financial institutions to determine whether or not to include Cryptocurrency options in their client portfolios, the risks associated with crypto tokens needed to be made clear.

 

"We have concentrated on this area because many of these businesses...might be investment businesses that pool hundreds of thousands or millions of dollars from clients and then lend it out while providing very high returns. You might say that it sounds a little bit like an investing firm or a bank, "added Gensler.

 

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"How do they accomplish that? What is the substance of those guarantees? To get these companies properly registered under the securities regulations, we'll work with the sector."

 

 

Companies dealing in cryptocurrencies have said that they are still unaware of the rules in the United States governing goods that let clients earn interest on holdings rather than trading them. Since May, attention has returned to the Cryptocurrency Markets as a result of recent periods of volatility that have long frightened watchdogs.

 

Several crypto lenders have faltered in recent weeks amid plunging crypto values. Celsius Networks has filed for bankruptcy.

 

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BlockFi announced a contract with FTX that allows the crypto exchange the opportunity to buy BlockFi for up to $240 million. Companies exposed to cryptocurrencies have already cautioned that decreases in token prices might have rippling consequences, notably by triggering margin calls. Meanwhile, as the US Federal Reserve has begun raising rates to battle inflation, investors have abandoned crypto markets.

 

The views from Gensler on Thursday come after he frequently expressed his opinion that some Cryptocurrency trading platforms would fit the definition of "securities" and ought to be traded and governed as such.