The U.S. Securities and Exchange Commission (SEC) is working to get some crypto lending companies properly registered if they operate more as investment firms, the head of the Wall Street regulator told CNBC in an interview on Thursday.
SEC Chair Gary Gensler also said it was up to large financial institutions to decide whether they want to include crypto options in their portfolios for clients, but that the risks of crypto tokens need to be made public.
"We have focused on this area because many of these firms...may well be investment companies taking hundreds of thousands or millions of customers funds, pulling it together, and then relending it while offering pretty high returns. Sounds a little like an investment company, or a bank, you might say," Gensler said.
"How are they doing that? What stands behind those promises? We're going to work with the industry to get these firms properly registered under the securities laws."
Cryptocurrency companies have said they remain unsure of U.S. regulations governing products that allow customers to earn interest on holdings instead of trading them.
Focus on crypto markets has intensified again since May amid recent spells of volatility that has long-alarmed watchdogs.
Several crypto lenders have stumbled in recent weeks amid slumping crypto prices. Celsius Networks has filed for bankruptcy. BlockFi signed a deal with FTX that gives the crypto exchange the option to buy BlockFi for up to $240 million.
Companies exposed to cryptocurrencies have previously warned that declines in token prices could have ripple effects, including by triggering margin calls.
Meanwhile, as the U.S. Federal Reserve has begun hiking rates to combat inflation, investors have fled crypto markets.
Thursday's comments follow Gensler's repeated statements that in his view some crypto trading platforms may meet the definition of "securities" and should be traded and regulated as such.