In a recent interview with Bloomberg, Securities and Exchange Commission (SEC) Chairman Gary Gensler shared his apprehension about the alleged prevalence of fraud and manipulation in the cryptocurrency market. These remarks come at a time when investing giants like BlackRock have filed spot Bitcoin (BTC) Exchange-Traded Funds (ETF) applications, primarily based on surveillance sharing agreements with Coinbase.

Gensler shed light on the various market functions present on crypto trading platforms, which are prohibited in traditional financial exchanges due to conflict of interest and investor protection concerns. He emphasized that while some crypto tokens fall within the scope of securities laws, the trading platforms themselves may not comply with established safeguards against fraud and manipulation.

According to Gensler, there is a significant level of noncompliance in the field, with crypto trading platforms not necessarily adhering to time-tested protections against fraudulent activities. This indicates that the SEC is well aware of these challenges and is actively working to address them. The regulatory agency has already taken action against companies such as Binance and Coinbase for violating securities laws and engaging in fraudulent practices. This reiterates the SEC’s commitment to cracking down on noncompliance within the crypto market.

The recent surge of spot Bitcoin ETF applications, backed by investment giant BlackRock and primarily relying on surveillance sharing agreements with Coinbase, may face opposition from Gensler due to these concerns. However, he has indicated that he will not make a direct statement until the applications are reviewed by the full five-member commission.

Gensler’s comments suggest that the SEC is likely to maintain a cautious approach when considering the approval of such products, especially given the ongoing concerns surrounding fraud in the nascent crypto industry. This skepticism from the SEC Chairman reflects a broader sentiment among regulators and policymakers, who have struggled to keep up with the rapid pace of innovation in the crypto marketplace.

While the SEC has yet to make a final decision on the recent wave of filings, Gensler’s cautious stance indicates that the commission will carefully evaluate each application. It is evident that the SEC is committed to balancing investor protection with the need for innovation in the cryptocurrency market.

At the time of writing, Bitcoin (BTC) is trading at $29,170, observing a minor decrease of 0.8% over the past 24 hours.

Disclaimer: The information provided in this research report is for informational purposes only and should not be interpreted as financial or investment advice. The NFT and cryptocurrency market is highly volatile, and readers should conduct thorough research before making any investment decisions.