US SEC working to register crypto lending firms -Gensler

US Securities and Exchange Commission (SEC) Chairman Gary Gensler testifies before a Senate Banking, Housing and Urban Affairs Committee oversight hearing on the SEC on Capitol Hill in Washington, U.S., September 14, 2021. REUTERS/Evelyn Hockstein/Pool

WASHINGTON, July 21 (Reuters) – The U.S. Securities and Exchange Commission (SEC) is working to get some crypto lending companies properly registered if they operate more like investment firms, the head of the Wall Street regulator told CNBC in an interview on Thursday.

SEC Chairman Gary Gensler also said that it is up to major financial institutions to decide whether to include crypto options in their portfolios for clients, but that the risks of crypto tokens must be made public.

“We’ve focused on this area because many of these companies… may well be investment companies that take hundreds of thousands or millions of customers’ funds, pool it and lend it back while offering fairly high returns. Sounds a bit like an investment. company, or a bank, you might say,” Gensler said.

“How do they do that? What’s behind these promises? We’re going to work with the industry to get these firms properly registered under the securities laws.”

Cryptocurrency companies have said they remain uncertain about US regulations governing products that allow customers to earn interest on holdings instead of trading them. read more

Focus on crypto markets has intensified again since May, amid recent bouts of volatility that have long worried watchdogs.

Several crypto lenders have stumbled in recent weeks amid falling crypto prices. Celsius Networks has filed for bankruptcy. BlockFi signed an agreement with FTX that gives the crypto exchange the option to buy BlockFi for up to $240 million.

Companies exposed to cryptocurrencies have previously warned that declines in token prices could have ripple effects, including by triggering margin calls.

Meanwhile, as the US Federal Reserve has begun raising interest rates to fight inflation, investors have fled crypto markets.

Thursday’s comments follow Gensler’s repeated statements that, in his view, some crypto trading platforms may meet the definition of “securities” and should be traded and regulated as such.

Reporting by Susan Heavey and Katanga Johnson in Washington

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