The year 2022 has been a roller coaster ride for the cryptocurrency sector. Beginning with the collapse of the Terra ecosystem in May to the recent debacle of the FTX crypto exchange, the market has gone through it all. These catastrophic events have further motivated the U.S. SEC to take a stricter stance on crypto-related firms and crypto assets as a whole.

Gensler also objected to proof-of-reserves reports, which some cryptocurrency businesses create to demonstrate that they have sufficient cash on hand to support consumer deposits. According to Gensler, the strategy, which has been adopted by significant cryptocurrency companies including the crypto giant Binance, falls short of the disclosures required to safeguard investors.