Decrypt’s Art, Fashion, and Entertainment Hub.
U.S. Securities and Exchange Commission Chairman Gary Gensler today said that rules for the cryptocurrency market already exist—but that the industry is still “rife with noncompliance.”
The SEC boss testified at the House Appropriations Subcommittee on Financial Services and General Government Wednesday and reiterated his point that the vast majority of coins and tokens in the crypto space are securities.
Congressman Sanford Bishop (D-GA) asked the chairman today if the SEC has “any plans to issue a rule to clarify how securities laws apply to digital assets,” echoing a common refrain from the crypto industry that has for years called for “regulatory clarity.” Gensler, in typical form, stuck to his guns that the rules for crypto could not be any clearer.
“The regulations actually already exist, sir. They’re called the securities regulation, and so there are disclosure regulations for when somebody tries to raise money from the public,” the SEC chair said.
Gensler has repeatedly said in the past that most digital assets—but not the biggest and oldest Bitcoin—fall under the securities definition. “Crypto tokens—without prejudging any one of them—you could look at nearly, most of them, and you could find a group of entrepreneurs with a Twitter site, with a website, with individuals, and I can bet that most of you are not visited by decentralized, non-existent management,” he said.
The SEC has continued to pursue what industry observers refer to as a “regulation by enforcement” approach when it comes to crypto, cracking down on companies and projects that push what the regulator deems as unregistered securities.
“We’ve seen the Wild West of the crypto markets, rife with noncompliance,” Gensler said, adding that rules were already in place to protect consumers.
“Frankly, of the ten or twelve thousand tokens, there are very few that don’t have a group of entrepreneurs in the middle that the public is counting on,” he continued when asked by Congressman Bishop about specifics on crypto regulation. “Those are securities under the securities law.”
The SEC has targeted some of the most recognizable crypto brands this year—with its crackdown intensifying following the quick and unexpected bankruptcy of digital asset exchange FTX in November.
In January, the Commission hit Genesis and Gemini with charges for offering unregistered securities.
Last month, it fined American crypto exchange Kraken $30 million for violating securities laws.
And just last week, it issued a Wells Notice to America’s biggest crypto exchange, the publicly traded Coinbase, alleging that the San-Francisco-based company’s staking products constitute unregistered securities. The notice means that an enforcement action against Coinbase is likely forthcoming.