It has been reported that the Chair of the United States Securities and Exchange Commission (SEC) has stated that a crackdown on the cryptocurrency industry is on the horizon in the wake of the high-profile failure of FTX.
The chairman of the Securities and Exchange Commission (SEC), Gary Gensler, was quoted in a recent article published by Bloomberg as saying that the regulatory agency will go after cryptocurrency firms that do not comply with its rules and comparing such businesses to casinos.
The length of the runway is being reduced. Casinos are examples of non-compliant intermediaries that can be found in this Wild West.
In addition to this, he asserts that the recent trend of cryptocurrency exchanges demonstrating that they have reserve assets to back up the funds of their customers is meaningless because the practise does not meet the current regulatory disclosure standards.
“Proof of reserves does not satisfy the requirement that customer funds be kept separate in accordance with the securities laws,” which states that “proof of reserves is not a full accounting of the assets and liability of a company.”
According to Gensler, the primary responsibility of government regulators should be to ensure that cryptocurrency companies keep their own funds and the funds of their customers in separate accounts and to maintain accurate records of all transactions.
“There are some people working in this industry who have discussed ways to provide customers with the confidence that their cryptocurrency is actually there. They should accomplish this by bringing themselves into compliance with time-tested rules pertaining to custody, segregation of customer funds, and accounting rules.