Securities and Exchange Commission Chairman Gary Gensler on Tuesday warned that new regulations are needed on cryptocurrencies and digital assets in order to protect U.S. national security.

“This asset class is rife with fraud, scams and abuses in certain applications,” he said. “There’s a great deal of hype and spin about how crypto assets work. In many cases, investors aren’t able to get rigorous, balanced, and complete information,” said the SEC chief during an appearance at the virtual Aspen Security Forum.

He expressed particular concern about stablecoins, or digital tokens that are pegged to the U.S. dollar or another fiat currency, and facilitate trading between various cryptocurrencies including bitcoin and ether. Gensler said that roughly 75% of all crypto trades involve some kind of stablecoin, like tether
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or USD coin
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“These platforms may facilitate those seeking to sidestep a host of public policy goals,” Gensler said. “Sidestepping our traditional banking system…and sidestepping anti-money laundering and tax-compliance sanctions,” he added, noting that this may threaten U.S. national security.

Gensler also called for greater regulation of decentralized finance, or DeFi, an alternate financial universe comprising countless applications that run autonomously, mostly on the Ethereum
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 network, where users can deposit their digital assets and earn returns, borrow or loan money and even buy and sell derivatives of blue-chip equities.

Read more: DeFi could revolutionize finance. Can regulators do anything about it?

Gensler has been a leading voice arguing for stricter regulation of cryptocurrencies, including bitcoin
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and ether
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though he has prioritized other issues, including mandatory climate risk reporting, in his first months as chairman.

Prior to his confirmation at the SEC, crypto enthusiasts were excited for his chairmanship, given that he spent several years at the Massachusetts Institute of Technology studying digital currencies and developed a course on “blockchain and money” that has attracted millions of viewers on YouTube.

“While I’m neutral on the technology, even intrigued — I spent three years teaching it, leaning into it — I’m not neutral about investor protection,” Gensler told Bloomberg News on Tuesday. ““If somebody wants to speculate, that’s their choice, but we have a role as a nation to protect those investors against fraud.”

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