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Crypto: SEC Chair Gensler looks to regulate cryptocurrency exchanges

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Yahoo Finance's Jen Schonberger joins the Live show to discuss the FTC regulating cryptocurrency trading exchanges.

Video Transcript

BRIAN SOZZI: The SEC is looking at how to regulate cryptocurrency trading exchanges, including separating out crypto market makers. Yahoo Finance cryptocurrency reporter Jennifer Schonberger has more on this. Jen.

JENNIFER SCHONBERGER: Good morning, Brian. That's right. SEC chair Gary Gensler looking into how the agency could regulate crypto trading exchanges. He says that crypto trading platforms and tokens are similar to trading securities and should be regulated in a similar way to traditional securities that trade on exchanges. Gensler saying, quote, "any token that is a security must play by the same market integrity rulebook as other securities under our laws. There is no reason to treat the crypto market differently just because of different technology."

He goes on to say, "we already have robust ways to protect investors trading on platforms. We ought to apply these same protections in the crypto markets." Now, specifically, Gensler says the agency is looking into how crypto trading platforms could also act as market makers, trading for their own accounts on the other side of their customers, and whether those market makers need to operate separately from those platforms.

The SEC is also looking into whether protections given to investors on traditional exchanges are applicable after some have asked if exemptions for so-called alternative trading systems could be applied to crypto. But don't hold your breath because Gensler says that they are different because crypto trading platforms have millions of retail customers directly buying and selling on the platform without going through a broker.

Now, also on the docket for oversight, how to protect crypto assets held by exchanges for customers who trade on their platforms and coordinating with the Commodities Futures Trading Commission to oversee crypto trading platforms where both crypto commodity tokens and crypto security tokens are traded. Gensler has also directed SEC staff to get crypto trading platforms to register with the commission and regulate them like exchanges. So, Brian, these comments are the most specific year to date from Chair Gensler on how the SEC may regulate crypto exchanges this year in the absence of Congress acting so far. Back to you.

BRIAN SOZZI: Well, the industry has been calling for regulation for the past year. Now they're going to be getting a taste of it very soon likely. Jennifer Schonberger, thanks so much.