In his most recent criticism, Gary Gensler, head of the SEC, questioned the decentralized properties of the cryptocurrency exchanges.
Gensler stated that he does not consider the decentralization of cryptocurrencies to be an issue while speaking at the SIFMA annual meeting on October 24. He admitted that the financial industry has been highly concentrated and centralized “from antiquity.”
“A tendency for central intermediaries to benefit from scale, network effects, and access to valuable data are there,” he continued.
For instance, Gesler said that only four asset managers were responsible for managing over 80% of the net assets of U.S index funds. In response to this, Satoshi Nakamoto developed Bitcoin. The aftermath of a severe financial collapse brought on by centralized banks and lending organizations contributed to the development of cryptocurrencies.
Are Cryptocurrency Exchanges Truly Decentralized?
The SEC chairman disagrees, painting the cryptocurrency market with the same centralized brush.
Even the cryptocurrency industry, which was built on the principle of decentralization, has seen centralization. Actually, there is a substantial concentration of middle-market middlemen in this industry.
He obviously means digital currency exchanges like Coinbase, Binance, and FTX. In recent years, they have all developed into centralized profit-hungry goliaths.
In order to subject exchanges to the same stringent regulations that apply to stock brokers and exchanges, Gensler wants to classify cryptocurrency assets as securities. Retail dealers may find it more challenging as a result.
However, it would probably be advantageous to institutions that are willing to take the extra steps. He asserted that the intermediates, such as the so-called crypto exchanges or lending platforms, are excessively centralized.
The SEC intends to examine tokens available on exchanges and take action against companies supplying unregistered securities as a result.