Crypto Tokens Cannot Avoid Securities Regulations, According to SEC Chair
The chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, said on Thursday that neither the assets nor the exchanges in the cryptocurrency market are intrinsically special. He stressed that proponents of crypto asset securities cannot hide behind the idea that their tokens are used for purposes other than as financial instruments. Gensler’s comments followed recent SEC enforcement proceedings against Coinbase and Binance, the two biggest platforms in the world and the United States, respectively, accusing them of trading unregistered securities.
According to Gensler, a cryptocurrency asset’s extra uses inside the blockchain ecosystem that it is connected to do not exclude it from being categorized as an investment contract. He emphasized that the investing public often buys these crypto assets in the hope of making money off the token issuers’ labors. Gensler defended the SEC’s actions by pointing out that market participants in traditional finance would not be permitted to engage in similar practices to those common in the crypto industry, even though tokens exclusively used within their native blockchain ecosystems may be exceptions to this classification. He rejected arguments that people lacked “fair notice” of probable illegality, arguing that people deliberately take the danger of punishment into account when making strategic business choices.
Gensler also addressed the widely held belief in the sector that crypto platforms cannot realistically file for SEC registration. He disagreed with this notion, pointing to recent events as proof of the opposite. Although he admitted that compliance for crypto intermediates involves work, he insisted that it is both feasible and acceptable.
The purpose of the SEC Chair’s statements was to defend the most recent enforcement actions and to make the agency’s regulatory position clear. Gensler emphasized the necessity for effective compliance within the business and the need of implementing current securities legislation to the cryptocurrency market.