Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), expressed his skepticism about cryptocurrency exchange activities during an online conference held on July 12th, coinciding with efforts by some companies to launch the first Bitcoin exchange-traded fund (ETF) in the United States.
Gensler was asked about the role of Coinbase, the largest cryptocurrency exchange in the United States. Coinbase has been selected as a partner for market surveillance by companies like BlackRock and Fidelity, who are hoping to use their data and expertise to persuade the SEC to approve their products.
Gensler did not comment on any specific ETF deployments, but instead reiterated his general concerns about the lack of regulation and oversight of cryptocurrency exchanges.
He stated that cryptocurrency platforms often offer “a mix of conflicting services” that can be detrimental to investors, such as trading against their own customers or acting as market makers.
He also mentioned that cryptocurrency exchanges have “limited risk oversight” to prevent or detect “money laundering transactions,” which involve manipulating the market by creating fake trading volume or price fluctuations.
He stated that this is one of the reasons why the SEC has rejected dozens of proposals for Bitcoin ETFs in the past, citing concerns about the transparency and integrity of the underlying BTC market.