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“The rules have already been published,” asserted Securities and Exchange Commission chairman Gary Gensler during a keynote speech on Monday, strenuously pushing back on criticism that the SEC has not provided useful guidance for crypto companies looking to remain in compliance with federal law.
The 27th annual Financial Markets Conference, held by the Atlanta Fed, is currently underway under the theme, “Old Challenges in New Clothes.” Speakers included Gensler and other prominent financial authorities, as well as several players in the digital economy.
Gary’s speech barely touched upon the digital assets market, but moderator Tom Barkin, president and CEO of the Federal Reserve Bank of Richmond, brought up the subject, asking about the SEC’s ongoing court case with Coinbase, as well as whether Gensler thought the agency had fallen behind on enforcement with cryptocurrencies.
Briefly mentioning Satoshi Nakamoto and the exciting field created by his innovation, Gensler said he doesn’t think the SEC is behind the times, mentioning the 140 cases that the agency has brought forth over the years. He was quick, however, to remind the public how cryptocurrency companies are building fraudulent business models.
“It’s a false narrative that they are decentralized," he said. "They tend towards centralization, and you can find a website and a team of entrepreneurs around most of these.” He went on to say that “their business models tend to be built on taking customer funds and commingling them.”
The SEC has been under fire—recently and in years prior—by the cryptocurrency industry for not having clear-cut nor innovative regulations.
The regulator seemed slightly miffed when asked about the crypto industry’s perennial request for clearer regulations, insisting that “there is nothing about a new technology that makes it non-consistent with public policies”—repeating what he stated in a congressional hearing earlier this year.
Looping back to earlier comments, Gensler referred to financial intermediaries in traditional money markets like rent-collecting-nodes, claiming the analogy is clear for crypto companies holding what they deem securities on their platform: they also need to adhere to the rules.
If that seems too difficult, Gensler said, the agency “stands ready to help them to come into compliance.”
Critics of the SEC have called such offers disingenuous, including the SEC's own crypto-friendly commissioner Hester Peirce, who pointed out that there is "no way to register" with the SEC. Republican lawmakers have similarly said Gensler's "push for firms to ‘come in and register’ is a willful misrepresentation of the SEC’s non-existent registration process.”
While U.S. regulators like Gensler insist that current regulations are enough, the European Union has been working hard to usher in a new set of rules for the crypto industry.