Securities and Exchange Commission (SEC) Chairman Gary Gensler said he believes “people will be hurt” if cryptocurrency markets remain unregulated.

During an interview with former federal prosecutor Preet Bharara, Gensler also expressed his concerns over special purpose acquisition companies (SPACs). He believes they could leave public market investors vulnerable.

Gensler remarked that the outsized growth of the cryptocurrency market to nearly $2 trillion recently emphasizes the need for regulatory action.

“This is not going to end well if it stays outside of the regulatory space,” he noted. “To think that a field that’s grown 10-fold in the last 18 months—not just in terms of asset value, but in the underlying lending and much more — that it’s going to stay outside of these public policy frameworks and succeed… We’ll end up with a problem and a lot of people will be hurt.”

Gensler also expressed concern about the loose way SPACs could potentially spend investors’ money. SPACs function like publicly traded shell companies that then acquire other companies, which effectively takes them public. According to Gensler, SPACs are structurally incentivized to find a merger deal, “even if it’s not a particularly great merger.” He said this could potentially happen at the expense of the investors they are raising money from.

Some believe that regulators will ultimately find cryptocurrencies incompatible with regulated markets. For instance, billionaire hedge funder Ray Dalio has suggested that regulators “will kill” Bitcoin if it becomes too successful. If enough people use a system beyond its control, the government will take steps to prevent Bitcoin from being purchased. Dalio pointed out that the US government had made a similar prohibition on purchasing gold during the Great Depression.

However, Gensler implied these concerns may be overblown, comparing the SEC’s role to that of traffic laws and sports referees. Ultimately, it depends on whether crypto players “want to comply with anti-money laundering laws, tax compliance, and the like,” as regulators “have a responsibility to the American public.”

Earlier, Gensler had described himself as “technology-neutral” when it comes to reshaping financial markets and securities. However, he added that he was not neutral in ensuring investors “are getting a full and fair disclosure” when investing cryptocurrencies or SPACs.

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The post ‘People Will be Hurt,’ If Crypto Markets Remain Unregulated, Says Gensler appeared first on BeInCrypto.

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