Shortly after the U.S. Securities and Exchange Commission filed its lawsuit against Coinbase on Tuesday, SEC Chairman Gary Gensler said that the crypto industry’s entire business model is “built on non-compliance.”
In a damning CNBC interview, top American securities regulator said: “We don’t need more digital currency.”
He then said that crypto exchanges are “commingling a number of functions” which wouldn’t be acceptable in traditional finance, giving the hypothetical example of the New York Stock Exchange also operating a hedge fund.
“We already have digital currency,” he added. “It’s called the U.S. dollar. It’s called euro. It’s called the yen. They’re all digital now.”
Gensler's comments came after the regulator today sued America’s biggest crypto exchange Coinbase for not having registered as an exchange, clearing house and broker—and allegedly selling unregistered securities.
Yesterday, the SEC also hit the world’s biggest digital asset exchange Binance with 13 civil charges, alleging that the massive crypto company had a “blatant disregard” of American federal securities laws.
The complaint alleges that Binance and its CEO Changpeng Zhao misused and commingled customers’ funds.
Since Garly Gensler became the SEC boss in 2021, the regulator has intensified a crackdown on the crypto industry.
And the pace has picked up since digital asset exchange FTX rapidly collapsed in November due to alleged criminal mismanagement. Prosecutors allege that the exchange commingled customer funds with its sister trading firm, Alameda Research, to make risky bets.
This year the SEC has targeted U.S. crypto exchanges Kraken, Bittrex, and Coinbase for allegedly selling unregistered securities.
But the crackdown has rattled some lawmakers—mostly Republicans—who claim the harsher rules and apparent lack of clarity will stifle innovation in the world’s biggest economy. Among the lawmakers who've cried foul of Gensler's handling of the SEC was Rep. Warren Davidson (R-OH), who went on to say he plans on introducing legislation to have Gensler fired.