SEC boss Gary Gensler warns Terra's crash will be followed by more crypto failures, and that will knock confidence in wider markets
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- SEC chair Gary Gensler sees more failed tokens and poorer trust in crypto after TerraUSD collapse.
- Gensler, an advocate for crypto regulation, said more investors would be hurt, the WSJ reported.
- Stablecoin TerraUSD and sister token luna collapsed last week as cryptocurrencies lost over $1 trillion in market value this year.
Securities and Exchange Commission Chair Gary Gensler expressed his concerns about the crypto markets following the collapse of major stablecoin terraUSD and the cryptocurrency backing it, luna, this month.
Speaking to reporters after a House Appropriations Committee panel hearing on Wednesday, Gensler said, "I think a lot of these tokens will fail," the Wall Street Journal reported on Wednesday.
"I fear that in crypto…there's going to be a lot of people hurt, and that will undermine some of the confidence in markets and trust in markets writ large."
TerraUSD and luna plummeted collapsed last week after the former, an algorithmic stablecoin, lost its 1:1 peg with the US dollar and both crashed to effectively zero. The two tokens' free fall was estimated to have wiped out more than $50 billion in paper value, Insider reported.
"The volatility in the crypto markets in recent weeks highlights the risks to the investing public," Gensler said. He has been a sharp proponent of increased regulation and oversight of the crypto industry, and called for an increased budget for the SEC to monitor the crypto industry during the hearing.
"The highly volatile and speculative crypto marketplace has mushroomed, attracting tens of millions of American investors and traders," he said.
Last year, Gensler compared the crypto market to the "Wild West", and said the SEC needed greater regulatory authority over it. He also said crypto would become mainstream only if clearer rules are in place.
Earlier this month, the SEC said it nearly doubled the size of its crypto assets enforcement unit, adding 20 additional positions to the group "responsible for protecting investors in crypto markets and from cyber-related threats."
"The US has the greatest capital markets because investors have faith in them, and as more investors access the crypto markets, it is increasingly important to dedicate more resources to protecting them," Gensler said in a press release.
Read more: JPMorgan analysts say the crypto crash isn't a repeat of the 2018 winter yet. They explain why market conditions could still bring 'significant upside' despite reverting institutional demand — and share tokens benefiting from terra's collapse
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