Ever since Gary Gensler was appointed as the new chair of the Securities and Exchange Commission (SEC) in April, investors and Silicon Valley top dogs have tried to figure out what he wants to do about cryptocurrencies like bitcoin.

Up until now they’ve looked for clues in the syllabus for the cryptocurrency course he developed at the Massachusetts Institute of Technology or looked for clues in comments Gensler made at the start of his tenure as SEC chair.

However, he’s now given his clearest signal yet during a speech at the Aspen Security Forum on Tuesday. In short: Gensler wants Washington to give the SEC more power to properly regulate bitcoin, ether and other digital tokens. And he didn’t mince his words as to why.

“This asset class is rife with fraud, scams, and abuse in certain applications,” Gensler said.

“We need additional congressional authorities to prevent transactions, products, and platforms from falling between regulatory cracks.”

The news comes as regulators around the world are clamouring for stricter rules around cryptocurrencies, something that a recent GlobalData research report predicted there will be more of in the near future.

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SEC wants to reel in bitcoin

Gensler is arguing that investors should be better protected when investing in cryptocurrencies. Speaking about bitcoin in particular, he addressed the prospect of allowing bitcoin exchange traded funds (ETF). An ETF is a type of security that tracks an index, sector, commodity or asset, but can be sold on a stock exchange as regular stocks.

Several investors have proposed the creation of bitcoin EFTs, but the SEC has so far rejected all bitcoin EFT applications.

During his speech, Gensler noted how many trusts and funds already invest in bitcoin futures. The SEC chair added that he was open to the creation of bitcoin EFTs, but that they would have to comply with existing EFT rules. Gensler said he was looking forward to a review into this topic.

Tokens are securities

Gensler noted that many digital tokens are traded as securities and that they should therefore be regulated accordingly. The SEC chair warned that the many “unregistered securities, without required disclosures or market oversight” in the market have raised the risk of manipulation, leaving “investors vulnerable.”

Following the speech, Gensler doubled down on the remarks on Twitter, posting a video making a case that the SEC should be given powers to bridge the gaps in the regulation.

Similarly, he signalled that cryptocurrency exchanges should prepare for tighter rules, saying that these platforms had “significant gaps in investor protection.”

Because some cryptocurrencies should be regulated as securities, they come under the purview of the SEC, meaning exchanges must register with the regulator before starting to trade, Gensler argued.

Fighting money laundering

Cryptocurrencies have often been linked with crimes for a long time. It’s the preferred payment method of ransomware gangs because of the anonymous and decentralised nature of the blockchain technology. For the same reason, it has been linked to money laundering and terrorism financing on many occasions.

Gensler addressed this risk during the speech when speaking about stablecoins, which are pegged against a fiat currency.

The SEC chair voiced concerns that stablecoins could be used to skirt money laundering and tax laws. He argued that they should also come under the purview of the SEC.

Tighter cryptocurrency laws are coming

The SEC isn’t the only regulator looking to toughen up the rules around bitcoin trading. Earlier this year, China set out to crack down on the country’s cryptocurrency sector, including both trading and mining digital money.

In June, the People’s Bank of China ordered four state-owned banks and the leading Ant Group-backed mobile payment app Alipay to cut off all transactions linked to bitcoin and other cryptocurrencies as Beijing continues its crackdown.

In Hong Kong, regulators introduced a draft bill in May that, if implemented, would force cryptocurrency exchanges to get a licence before they were allowed to trade in the city.

The Financial Conduct Authority (FCA) in the UK warned in June that a “significantly high number” of exchanges didn’t follow the country’s money laundering laws.

A few weeks later the FCA followed up the statement by issuing a warning against cryptocurrency exchange Binance. The warning said the exchange’s UK subsidiary Binance Markets Limited was not permitted to undertake any regulated activity in the UK, such as offering cryptoasset derivatives or securities.

On the other hand at around the same time, El Salvador announced the country would start to accept bitcoin as legal tender and there are already rumours that India may soon follow.