Regulation News

U.S. SEC chair Reacts To Terra (LUNA) Crash! Rules & Disclosures Needed to Protect Investors

Written by: Qadir AK

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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May 17, 2022

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Bitcoin, the bellwether for the crypto market, took a beating this week by hitting a 52-week low, falling down to $25,402. This week’s massive variations are directly linked to the troubles of TerraUSD(UST). Terra’s UST stablecoin lost its peg with the U.S dollar, resulting in a crypto market crash, leaving an impact of billions of loss on investors. 

Observing all this volatility of the crypto market, SEC Chair Gary Gensler said that the crypto market needs more regulatory frameworks to protect investors from projects like Terra. He thinks that crypto investors are not protected and more regulations are required to be generated to protect them.

And blames crypto trading and crypto wallet platforms for not providing the proper information, making investors lose their hard-earned money as in the case of LUNA and UST. 

The Chairperson of SEC believes that cryptocurrencies are highly fluctuating and most of the activities happen on a selected number of trading platforms only. Considering this as a major issue for crypto investors, Crypto trading platforms and token issuers are highly recommended to work with SEC to protect investors as well as institutions through a regulation, involving a set of rules and disclosures. 

Crypto Rules and Disclosures Needed to Protect Investors

Gary Gensler at the Financial Industry Regulatory Authority’s annual conference held in Washington, claiming that the crypto market says that it is not decentralized, as only a few trading platforms have control over the market. Continuing the claim he says that crypto trading platforms must provide the information to investors, making them believe that trading platforms are in support of them and their assets are in safe wallets. Stating: 

“We have this basic bargain: You the investing public can make your choices about the risk you take, but there is supposed to be full and fair disclosure, and people are not supposed to lie to you.” 

Further, he assures investors that, SEC is working with the Commodity Futures Trading Commission to protect investors trading in bitcoin, and cryptocurrencies. He further suggests crypto firms follow basic market principles such as anti-fraud, anti-manipulation, and no front-running or tailgating and also ensuring the order book is real.  

A strong crypto advocate Gary Gensler, SEC’s Chair has kept on saying that stablecoins must be regulated as they trade in and out of different cryptocurrencies. They must be applied with more security definitions, and crypto trading platforms now have to register with the SEC to assure investor’s protection.

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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