The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, has warned the public about crypto investments that seem “too good to be true.” Meanwhile, the U.S. Treasury Department says that the recent crypto market turmoil underscores the urgent need for regulatory frameworks that mitigate the risks posed by digital assets.
SEC Chairman Gary Gensler cautioned investors last week about crypto lending platforms offering products that seem too good to be true, Reuters reported.
“We’ve seen again that lending platforms are operating a little like banks. They’re saying to investors ‘Give us your crypto. We’ll give you a big return 7% or 4.5% return,’” Gensler was quoted as saying. “How does somebody offer (such large percentage of returns) in the market today and not give a lot of disclosure?”
The SEC chair stressed:
I caution the public. If it seems too good to be true, it just may well be too good to be true.
Following Celsius, Hong Kong-based Babel Finance temporarily suspended withdrawals and redemptions of its crypto products.
The collapse of cryptocurrency terra (LUNA) and stablecoin terrausd (UST) in early May and troubles at crypto lending platforms have shaken the crypto market.
Following the crypto market sell-off, an official with the U.S. Treasury Department highlighted the urgent need for cryptocurrency regulation last week. Nothing that the Treasury Department is “monitoring activity in the crypto market,” the official told Reuters:
We believe the recent turmoil only underscores the urgent need for regulatory frameworks that mitigate the risks that digital assets pose.
“We continue to work closely with our regulatory partners, as they take action under their existing authorities, and offer guidance and expertise as Congress considers legislation to further address these risks,” the official detailed.
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