The head of America’s markets regulator has called cryptocurrencies a “Wild West” afflicted by fraud and scams in the clearest sign yet of a stricter approach towards Bitcoin and other digital coins.
Gary Gensler, the new chair of the Securities and Exchange Commission, told a conference that “this asset class is rife with fraud, scams and abuse in certain applications” that demanded stricter oversight.
The comments are a major blow to cryptocurrency supporters’ hopes that Mr Gensler, who taught a university course on digital currencies before joining the SEC, would adopt a light-touch approach or seek to bring Bitcoin into the fold of other financial assets.
“Right now, we just don’t have enough investor protection in crypto. Frankly, at this time, it’s more like the Wild West,” Mr Gensler said at the Aspen Security Forum.
“There’s a great deal of hype and spin about how crypto assets work. In many cases investors aren’t able to get rigorous, balanced, and complete information. We need additional congressional authorities to prevent transactions, products and platforms from falling between regulatory cracks."
Mr Gensler has been widely expected to attempt to fill a regulatory vacuum around Bitcoin, whose value surged to more than $60,000 earlier this year before recently falling by as much as half.
Traders have speculated about whether he might attempt to legitimise the technology by pushing for guidelines around how banks and investors can hold it, or push for greater controls.
Bitcoin’s price was flat after Mr Gensler’s speech, rising by about 3pc to $39,300 on Wednesday afternoon as Google started accepting cryptocurrency adverts for the first time in three years.
The search giant had banned adverts related to digital currencies in 2018 but has now reversed the policy for certain approved advertisers.
Mr Gensler also warned against US investors backing Chinese companies, saying he was concerned they may not be receiving enough information about them.
Last week the SEC began requiring additional disclosures from Chinese companies before allowing them to float in New York.