SEC Chair Gary Gensler Warns of Imminent Crypto Crackdown, Explains Why Proof of Reserves Has No Value: Report

The Chair of the U.S. Securities and Exchange Commission (SEC) reportedly says that a crackdown on the crypto industry is imminent in the wake of FTX’s high-profile collapse.

According to a new report by Bloomberg, SEC Chair Gary Gensler says that the regulatory agency is coming after crypto firms that don’t comply with its rules, and compares such companies to casinos.

“The runway is getting shorter. The casinos in this Wild West are non-compliant intermediaries.”

He also says that the trend of crypto exchanges proving they have reserve assets to back up their customers’ funds means nothing, as the practice doesn’t live up to current regulatory disclosure standards.

“Proof of reserves is neither a full accounting of the assets and liability of a company, nor does it satisfy segregation of customer funds under the securities laws.”

According to Gensler, regulators should focus on making sure crypto firms separate their funds and their customers’ funds as well as keep accurate records of all transactions.

“There are some in this field that have talked about ways to give customers confidence that their crypto is really there. They should do that by coming into compliance with time-tested custody, segregation of customer funds rules and accounting rules.”

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