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SEC chief Gary Gensler hints that more scrutiny lies ahead for cryptocurrencies, SPACs

  • Gensler tells lawmakers that SPACs and digital coins posed significant policy and investor protection questions
  • He also suggests private equity was likely to get stepped-up oversight as well

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Gensler wants to bring the kind of protections to cryptocurrency exchanges that a stock investor would get on the New York Stock Exchange or Nasdaq platforms. Photo: Reuters
Bloomberg
Wall Street’s main regulator is signalling that the Biden era will spell tougher oversight for cryptocurrencies and blank-cheque companies, two of the white-hot market’s most talked-about asset classes.
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US Securities and Exchange Commission (SEC) Chairman Gary Gensler on Wednesday told lawmakers that special purpose acquisition companies (SPACs) and digital coins posed significant policy and investor protection questions. He referred to SPACs, shell companies that list on stock exchanges for the purpose of buying other firms and making them public, as “blank-cheque IPOs”.

The financial world has been anxiously waiting to see how Gensler will steer the SEC at a time when retail investors have helped drive markets to record highs. Cryptocurrency enthusiasts, who had been hoping the regulator would take a more accommodative approach to digital coins, have thus far been disappointed – and on Wednesday they got more of the same.

“I look forward to working with fellow regulators and with Congress to fill in the gaps of investor protection in these cryptocurrency markets,” he said in remarks prepared for a House Appropriations Committee subcommittee. He raised concerns about everything from cryptocurrency exchanges to decentralised financial platforms.

During the hearing Gensler went further, adding that he wanted to bring the kind of protections to cryptocurrency exchanges that a stock investor would get on the New York Stock Exchange or Nasdaq platforms.

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On equity markets, Gensler discussed how the SPAC boom – along with the surge in IPOs and direct listings – had placed a “a lot of demands on the SEC’s limited resources”. He said that the agency has spent significant time on the issue, citing guidance issued last month for how firms should account for warrants held by early investors in SPACs.
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