U.S. regulators, already skeptical of crypto, are doubling down on their stance as the digital asset markets plunge this week. U.S. Securities and Exchange Commission chair Gary Gensler made his concerns clear in an interview with Bloomberg on Tuesday, calling out crypto exchanges for offering multiple services that are often in conflict with one another, such as custody, market-making and trading.
“Crypto’s got a lot of those challenges– of platforms trading ahead of their customers. In fact, they’re trading against their customers often because they’re market-marking against their customers,” Gensler said.
Traditional exchanges are required by law to keep certain functions separate to prevent them from front-running, or trading ahead of their customers’ orders. Gensler has warned about front-running in crypto before, advocating last year before the Financial Services and General Government subcommittee for rules similar to those that govern public listings on the Nasdaq stock exchange.
Gensler specifically took aim at the top three largest stablecoins — Binance USD, USD Coin and Tether — saying that it is not a coincidence that they are all closely tied to crypto exchanges. Binance USD was founded by global exchange Binance, and leaked documents revealed that Tether has ties to Bitfinex. USD Coin, meanwhile, is controlled by the Cente consortium, of which publicly-traded crypto exchange Coinbase is a founding member.
“Each one of the three big ones were founded by the trading platforms to facilitate trading on those platforms and potentially avoid AML and KYC,” Gensler said, referring to anti-money-laundering and “know your customer” regulations applied to financial transactions.
The SEC revealed its plans to double the size of its Crypto Assets and Cyber Unit just last week, and Gensler’s comments come during a time of heightened scrutiny for stablecoins in particular, catalyzed in part by the rapid decline of Terra’s UST stablecoin. U.S. Treasury Secretary Janet Yellen also pushed for more crypto regulation in her annual testimony in front of the Senate Banking Committee yesterday, saying it would be “highly appropriate” for stablecoins specifically to be regulated by the end of the year.
https://alltechnewstime.com/2022/05/06/the-sec-gets-seed-funding/
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