The market of cryptocurrency business is dealing with a lot of tokens that fit the definition of securities. At least US Securities and Exchange Commission (SEC) Chief, Gary Gensler, believes so.
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In a recent interview with the Washington Post, Gensler said that cryptocurrency exchanges, lending platforms and other companies offer services with assets that are highly likely to be considered by the agency as securities. Gensler called the business to come to the SEC to figure out how to register and comply with the rules.
"I do really fear that we will keep bringing these enforcement cases, but there is going to be a problem. There is going to be a problem on lending platforms or trading platforms, and frankly when that happens I think a lot of people are going to get hurt," Gensler said.
While Gensler has not specified on what platforms will likely get hurt, his comments come after BlockFi and Celsius Network, platforms that allow users to earn interest on cryptocurrency-based collateral, came under scrutiny from US state authorities over their business model.
For instance, according to the New Jersey Bureau of Securities, BlockFi has been funding its business at least partly through the sale of unregistered securities. Hence, the New Jersey Bureau of Securities assumes the company violated relevant securities laws.
In case with Celsius, the Texas State Securities Board filed a notice seeking a hearing to decide whether it should issue a cease and desist order against the company as Celsius was "illegally funding lending operations" through the sale of unregistered securities in the form of cryptocurrency interest-earning accounts.
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