(Kitco News) - Crypto exchanges are not well-regulated, and many digital coins "don't really have anything that backs them," said Maureen Jensen, former Chair and CEO of the Ontario Securities Commission (OSC). The OSC oversees securities in the Canadian province of Ontario. "Many of these exchanges don't seek registration and they don't follow the rules," she said.
Jensen spoke with David Lin, Anchor and Producer at Kitco News, at the PDAC 2022 Convention in Toronto.
Quadriga and other frauds
Crypto exchanges are not well-regulated, said Jensen, citing cases in the past in which clients' funds were endangered.
"[The exchange is] a custodian of your money, unless you demand that you want to put it into your wallet," said Jensen. "In many cases, they don't do that. And then when you go for settlement and you want to take it out, it's not available or it takes too long… There have been people who have bought and sold Bitcoin who haven't been able to get their coins out for months. The problem is that there's no obligations on those exchanges. They are not regulated."
Jensen cited the case of Quadriga, which was Canada's largest crypto exchange. In 2019, Quadriga entered bankruptcy after allegations that the CEO was trading with his clients' Bitcoin and operating a Ponzi scheme.
Warning that this can happen again, Jensen highlighted the need for more regulation. She said that investors should determine, "What is this coin? What is backing this coin? Who's developing this coin and where is it going to be traded? You have to see, are these good players in the industry? Do they have capital behind them, or are you the capital?"
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Macroeconomic outlook
Jensen sees the world bifurcating into the West, dominated by the United States, and the East, commandeered by Russia and China. This, in turn, means more volatility globally.
"We're going to have inflation and we're going to have issues with supply chains," she said. "… For example, suddenly we have a Russia-Ukraine occupation, and now the price of oil is skyrocketing, because the Russians have reduced their supply of oil and gas by 40 percent over the last month or two."
Jensen highlighted geopolitical tensions in Eastern Europe and a more "militaristic China." She also pointed out the risk of China and Russia using their strategic metal reserves to corner markets in rare earth minerals. "We have to think about broadening our supply chain," she said.
She remarked, "As soon as you have armed conflict anywhere in the world, you're going to start thinking about "what do I need to ensure that I'm safe, that I can build my infrastructure?'"
To find out which metals Jensen thinks will dominate in the future, watch the above video.
Follow David Lin on Twitter: @davidlin_TV
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