SEC Chairman Gary Gensler says Crypto Exchanges are betting on their own clients. report

U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler said the way cryptocurrency exchanges are structured could work against users.

In a new Bloomberg report, Gensler note Unlike traditional finance, cryptocurrency exchanges do not establish clear divisions between the various aspects of their services.

Because exchanges are responsible for managing assets, trading on both sides of the market, and providing a venue for traders, Gensler is concerned that this “mixing” could be detrimental to its clients.

“Crypto faces many challenges, such as a platform that transacts before customers.

In fact, they often do business with customers because they do market marking on them.”

The SEC chairman also aims to peg the US dollar 1:1 by observing that the three largest stablecoins, Bitfinex’s Tether (USDT) and Coinbase’s US Dollar, are all owned by cryptocurrency exchanges. It aims to be a so-called stablecoin. Coin (USDC), Binance Coin on Binance (BUSD).

Gensler said he is concerned that exchanges could bypass anti-money laundering (AML) and Know Your Customer (KYC) rules in the process.

“I don’t think it’s a coincidence. Each of the three large platforms was established by a trading platform to facilitate trading on that platform and potentially avoid AML and KYC.”

Yesterday, the Federal Reserve noted the risks associated with stablecoins in its long and extensive report on financial stability. The Fed has mentioned the possibility that a central bank digital currency (CBDC) will act as a stablecoin, but will receive government rules and secure backing.

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Disclaimer: Opinions expressed in the Daily Hodl are not investment advice. Investors should do their due diligence before making high-risk investments in Bitcoin, cryptocurrencies or digital assets. Your transfers and transactions are at your own risk and you are responsible for any losses you may incur. The Daily Hodl does not recommend buying or selling cryptocurrencies or digital assets, and The Daily Hodl is not an investment advisor. Daily Hodl is involved in affiliate marketing.

Main Image: Shutterstock/Natalia Siiatovskia

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