- SEC Chair Gary Gensler underscores the necessity of transparency in crypto markets.
- Gensler suggests the market requires “disinfectant” to address potential shortcomings.
- He warns against repeating historical market collapses due to a lack of transparency.
In a recent address at the Columbia Law School conference, Securities and Exchange Commission (SEC) Chair Gary Gensler reiterated his stance on the necessity of transparency in the crypto markets. Specifically, Gensler suggested the crypto markets could benefit from a “sunlight and disinfectant.”
Gensler expressed this view while emphasizing the significance of appropriate disclosures by crypto projects. He highlighted the manifold benefits of investors having access to disclosure mandated by laws and regulations.
Firstly, Gensler emphasized that disclosure fosters more efficient markets by facilitating better price discovery. According to him, more information enables prices to reflect a company’s prospects more accurately.
Furthermore, the SEC chair noted that disclosure cultivates trust in markets. He pointed out that investors are more inclined to invest their capital when they receive consistent, comparable, and reliable disclosure.
Meanwhile, Gensler highlighted the concerning trend of some crypto projects attempting to limit the information available to investors. He drew parallels to the 1920s when federal disclosure requirements were absent.
Gensler pointed out that the absence of disclosure led to rampant fraud, manipulation, and market abuse. Consequently, investors suffered losses and lost faith in the integrity of the capital markets, ultimately leading to a market collapse.
In parallel, he emphasized that some contemporary voices are advocating for further exemptions to the rules mandating the registration of public offerings. According to Gensler, the absence of registration equates to a lack of mandatory disclosure, which raises concerns about transparency and investor protection within the crypto markets.
Echoing U.S. Supreme Court Justice Louis Brandeis’ sentiment from 1913, Gensler cited, “Sunlight is said to be the best of disinfectants.” On this premise, the SEC chairman concluded that many would agree that the crypto markets could benefit from a dose of “disinfectant” to ensure integrity and mitigate risks for investors.
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