This week started with a bloodbath on Satoshi Street with Bitcoin and altcoins eroding investors’ wealth after rallying for past few weeks. Amid the strong volatility this month, a group of investors’ advocates wrote to the U.S. SEC on Monday, to amp up the crackdown on the crypto market.
These groups include the Americans for Financial Reform Education Fund and the Consumer Federation of America. They also wrote that several crypto projects have been flouting investor protection rules and deserve more scrutiny. Besides, they specifically wrote about crypto lending, stablecoins, and exchanges requiring increased SEC attention. As reported by Bloomberg, the letter notes:
“Without significant regulatory guidance, the digital asset marketplace has been born and grown into a Wild Wes. It is urgent for the Commission and other federal financial regulators to enforce the law to better protect investors and improve the integrity and stability of the digital asset markets.”
Amid all the crypto market buzz, valuations of some crypto projects and their native digital assets have skyrocketed in recent times. Besides, SEC Chairman Gary Gensler has already hinted at the need for strong measures in the crypto space. In the past, Gensler sought additional authority from Congress to regulate the crypto space.
Crackdown on Stablecoins Coming?
The U.S. regulators are working to initiate a crackdown on the rapidly growing stablecoins market. The U.S. Treasury Department is conducting a review for stablecoins with other agencies and shall introduce new oversight and regulatory rules for their functioning.
Stablecoin providers such as Tether and USDC Coin hold reserves in the form of cash, commercial papers, and corporate bonds. The investor advocates group argues that these reserves are similar to the ones held by the money market funds. Thus, they are vulnerable to market stress.
Speaking of the two largest stablecoins – Tether and USDC – the groups noted: “Clearly, both products may create significant risks to investors and consumers”.
