More Crypto Market Turmoil Is Predicted by SEC Chairman Gary Gensler

Gary Gensler


Al Drago/Bloomberg News

WASHINGTON—Securities and Exchange Commission Chairman

Gary Gensler

said Wednesday he worries that more investors will be harmed in cryptocurrency markets, after this month’s implosion of the stablecoin known as TerraUSD.

“I think a lot of these tokens will fail,” Mr. Gensler told reporters after a congressional hearing 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.”

Crypto markets have shed more than $1 trillion of value over the past six months as the Federal Reserve started to unwind its easy-money policies and regulators dialed up their attention regarding crypto. The selloff accelerated in early May after the central bank lifted interest rates. TerraUSD, a token whose price was supposed to remain pegged to the dollar, suddenly fell, along with the coin that was meant to back it, known as Luna.

The turmoil has sparked unease in some corners about the possibility of contagion to other asset classes.

Rostin Behnam,

chairman of the Commodity Futures Trading Commission, cited Monday the potential for a “knock-on effect on traditional assets and traditional markets” if cryptocurrency prices fall sharply.

Mr. Gensler said Wednesday that exposure to crypto in SEC-registered asset managers isn’t significant but that the agency has less visibility into private funds and particularly in family offices. The SEC proposed a rule in January that would increase the amount and timeliness of confidential information that private-equity and hedge funds provide it through a document known as Form PF.

Write to Paul Kiernan at [email protected]

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