Former Securities and Exchange senior counsel Howard Fischer said the move by several U.S. states to open an investigation into crypto lender Celsius Network's recent freeze on withdrawals will ultimately lead to further regulation and oversight at the federal level.
“What you're going to see is what I like to consider a return to normalcy,” Fischer said on CoinDesk TV’s “All About Bitcoin” on June 16. “Institutions that deal in crypto are going to be regulated as if they were more standard financial institutions.”
Fischer, a partner at the New York-based law firm Moses & Singer, said with the Celsius debacle, the SEC will be looking at market integrity, investor protection and transparency.
He added that the problem at Celsius is “an issue that goes well beyond one company” as it points to the entire crypto industry, “especially to crypto lending.”
Further regulations would require crypto platforms to report their assets and liabilities, and run and report their risk scenarios, Fischer said.
“Basically, [they’ll] provide a level of disclosure not only to participants in markets, but to regulators that they haven’t been producing, and perhaps, are not expected to produce now,” he said.
“Whether or not there are investors, shareholders or account holders who didn't fully understand what the risks were, what the potential liabilities were and what the potential loss scenarios could possibly be," he said.
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The last purchase by the Central American country had been in May.
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Celsius Network is consulting with experts to try to reduce the fallout from its mid-June swoon.