- SEC Chair Gary Gensler persists in viewing most crypto assets as securities, pointing to industry “noncompliance” as a crisis trigger.
- Despite defeats against Ripple and Grayscale in court, the SEC’s stance on cryptocurrency regulation remains unyielding.
Amid recent courtroom defeats, the U.S. Securities and Exchange Commission (SEC) Chair, Gary Gensler, continues to hold his ground, asserting that most crypto assets are securities and warrant the SEC’s oversight. Gensler attributes the turmoil in the cryptocurrency sector to the industry’s pervasive noncompliance with existing securities regulations.
Drawing Parallels to the Past
Gensler’s reference to the economic depression of the 1920s, a period before the establishment of securities laws, illustrates his belief in the urgent need for stringent regulation in today’s rapidly evolving crypto market. As he prepares for his testimony at the Senate Committee on Banking, Housing, and Urban Affairs scheduled for 12 September, it’s anticipated that this comparison and his strong beliefs on the subject will be reiterated.
The Howey test, a legal yardstick used to ascertain if an asset is considered a security, has frequently been highlighted by Gensler. He stresses that as the majority of crypto tokens align with this criteria, the onus is on crypto intermediaries to adhere to securities regulations. This perspective, however, hasn’t been universally accepted. This became glaringly evident when the SEC’s allegations of federal securities law violations were dismissed in their legal encounters with both Ripple [XRP] and Grayscale.
SEC’s New Initiatives
The hearing is also set to shed light on two of the SEC’s latest propositions. One delves into the custody protocols for crypto assets, while the other aims to revise the definition of ‘exchange’ to formally encompass cryptocurrency platforms.
Cryptos in the Spotlight: Bitcoin & Ethereum
The crypto realm awaits the Senate Committee hearing with bated breath, seeking clarity on Gensler’s evolving views, especially regarding industry titans like Bitcoin [BTC] and Ethereum [ETH]. While Gensler has previously categorized most assets, barring Bitcoin, as securities, he has remained somewhat ambiguous about Ethereum’s exact classification – a matter that has sparked debates between the SEC and the Commodity Futures Trading Commission (CFTC).
As discussions around crypto regulations in the U.S intensify, many critics argue that the current regulatory approach under Gensler’s leadership leans towards enforcement, especially given the murky legal landscape surrounding cryptocurrencies.