The SEC sets its sights on the crypto “Wild West”

WHEN GARY GENSLER took over as the head of America’s Securities and Exchange Commission (SEC) in April, he might have seemed pretty crypto-friendly. Only months before he had taught a course on cryptocurrencies at the Massachusetts Institute of Technology; he has said that the innovation associated with bitcoin will be a “catalyst for change” in finance. Yet, speaking at the Aspen Security Forum on August 3rd, he probably dashed the hopes of crypto buffs. He signalled that he would seek tougher policing of the crypto-sphere, which he described as “rife with fraud, scams and abuse”.

Mr Gensler offered the most fleshed-out vision yet for how the SEC might regulate cryptocurrencies. These tokens, he said, were not a means of exchange but “highly speculative stores of value”. That in itself was not a problem—investors should be left to gamble should they wish to. But punters often could not access “rigorous, balanced and complete information”, meaning a lot of them could be hurt.

That calls for greater investor protections, which fall into three broad buckets. The first relates to what the SEC already does. The regulator claims jurisdiction over the crypto assets that it defines as securities; issuers of these must provide disclosures and abide by other rules. The SEC‘s definition uses a number of criteria, including the “...