SEC Chairman Gary Gensler Warns of Looming Crypto Crackdown, Explains Why Proof of Reserves Has No Value: Report

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The chairman of the United States Securities and Exchange Commission (SEC) has reportedly said that a crackdown on the crypto industry is imminent following the highly publicized collapse of FTX.

According to a new report from Bloomberg, SEC Chairman Gary Gensler says the regulatory agency is going after crypto companies that don’t follow its rules and likening those companies to casinos.

The track shortens. The casinos of this Wild West are non-compliant intermediaries.

He also says that the trend of crypto exchanges proving they have reserve assets to safeguard their clients’ funds means nothing, as the practice falls short of current regulatory disclosure standards.

Proof of reserves is neither a complete accounting of a company’s assets and liabilities nor satisfies the segregation of client funds under securities laws.

According to Gensler, regulators should ensure that crypto firms segregate their funds from those of their customers and keep accurate records of all transactions.

Some in this space have talked about ways to give customers confidence that their crypto is really there. To do this, they must comply with proven rules on custody, segregation of client funds and accounting.

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