SEC Head Honcho Gary Gensler Double Downs on Demand for Strong Crypto Regulations and Investor Protection
Gary Gensler, the current SEC Chairman, rejected the notion that current securities law is incompatible with the crypto market.
The SEC Supremo also asked crypto intermediaries such as crypto exchanges to register with them as securities exchanges and broker-dealers.
He also supported giving regulatory authority over the crypto industry to the CFTC when it comes to nonsecurity tokens.
Gary Gensler, the Chairman of the US Securities and Exchange (SEC), is yet again calling for crypto regulation.
A “vast majority” of crypto are securities issued to the public in violation of federal laws, he said at the Practicing Law Institute.
“These are not laundromat tokens. Promoters are marketing, and the investing public is buying most of these tokens, touting or anticipating profits based on the efforts of others,” highlighted Gensler.
Can Securities Law be Extended to Cryptocurrencies?
Many in the crypto industry have been calling for a new set of rules designed particularly for crypto assets due to existing securities law being unsuitable.Gensler completely rejected that notion saying, “Nothing about the crypto markets is incompatible with the securities laws.”
It is important to point out here that the SEC officials, both current and former, have reiterated multiple times that most cryptocurrencies are actually securities, barring Bitcoin.
Ethereum, the second largest cryptocurrency by market cap, too, has been given a clean chit in the past. Still, the current SEC Chair, Gary Gensler, has denied giving any definitive statements on Ethereum’s status. So, the SEC’s stance toward Ethereum is unclear at the moment.
However, a piece of news making rounds on crypto Twitter indicates that Gensler would love to back away from the previous SEC stance that Ethereum is a non-security but hasn’t found a credible way to pull this off.
The focus has been on protecting the investors, which is “just as relevant” in crypto “regardless of underlying technologies,” he added. According to him, investors need disclosure to “help them sort between the investments that they think will flourish and those that they think will flounder.”
The SEC chairman further called for crypto intermediaries like exchanges to be registered with the agency as securities exchanges and broker-dealers. On top of that, he wants crypto and stablecoin operators to “get their tokens registered and regulated.”
Gensler concluded his remarks by quoting Joseph Kennedy, the first Chairman of the SEC, “No honest business need fear the SEC.”
James Powell, chair of the Federal Reserve, echoed Gensler’s sentiments, saying the sector needs to be “appropriately regulated” if it intends to play any role in the global financial system.
Sharing Power With the CFTC
At a separate event, Gensler signalled that he would support Congress handing more authority to the Commodity Futures Trading Commission (CFTC) greater power to oversee certain cryptocurrencies.
Speaking at an industry conference, the Chairman said he looked forward to working with Congress to give the SEC’s sister markets regulator added power to oversee and regulate “non-security tokens…and the related intermediaries.”
Gensler also said he is open to working with the lawmakers as long as they “don’t inadvertently undermine securities laws.”
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