Home Markets SEC’s Gensler Wants Crypto Exchanges to Separate Market Making and Custody – Ledger Insights

SEC’s Gensler Wants Crypto Exchanges to Separate Market Making and Custody – Ledger Insights


SECOND Chairman Gary Gensler talked about cryptocurrency lending and exchange platforms in his recent Office Hours video. He proposed exploring whether exchanges should have custodianship of private keys and separating market-making and exchange activities in the same way as stock exchanges.

It is well known that there is an ongoing turf war between US regulators, the SECONDand CFTC about regulator will be responsible for overseeing the cryptocurrency markets. The recent lawsuit against a former Coinbase executive for insider trading brought this issue to the fore, with the SEC saying the cryptocurrencies involved in the insider trading case are all securities.

Bloomberg then reported that Coinbase was under investigation for allowing Americans to trade digital assets that should have been registered as securities.

During Gensler’s office hours, he confirmed that SEC staff were working directly with the platforms to get them registered and regulated. And to ensure that crypto tokens “if any” are registered as securities.

The SEC Chairman said he wants to ensure that cryptocurrency platforms provide consumer protection similar to that of the stock market. Several recent crypto bankruptcies have highlighted this problem, with a lending platform Celsius maybe more than others.

Private keys and market making

Gensler said of the custody of the private keys: “Imagine handing over all your stocks to the New York Stock Exchange? It would never fly. He wants to make sure the assets are protected. Will this mean exchanges are required to use third-party digital asset custodians? Certainly some unsuspecting people had assumed that their assets would be confined to crypto exchanges.

Gensler also discussed the inherent conflicts of interest if exchanges are their own market maker. It therefore seeks to push to separate this activity from crypto exchanges.


Please enter your comment!
Please enter your name here