SEC Chair Gensler Releases Opinion Piece About Crypto Regulation

Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler recently authored an opinion article about how he believes crypto assets should be regulated in Wall Street Journal. Gensler noted in the article:

“There’s no reason to treat the crypto market differently from the rest of the capital markets just because it uses a different technology.”

The SEC boss explained: “Recent market events show why it is critical that crypto firms comply with securities laws.” He added that “in recent months, some crypto lending platforms have frozen their investors’ accounts or gone bankrupt. When it comes to bankruptcy, these investors have to get in line at the court.”

Touching on the topic of was assets qualify as securities or otherwise, Gensler explained that regardless of what the financial product is, be it an app, a lending platform, a crypto exchange, or a decentralized finance (DeFi) platform:

“Across decades of cases, the Supreme Court has made clear that the economic realities of a product — not the labels — determine whether it is a security under the securities laws.”

Dialogue with the SEC: Gary Gensler

While admitting that “there are costs of complying with securities laws, just as there are costs to car makers of adding seat belts,” Gensler asserted that there is a way around it.

The SEC chief also encouraged cryptocurrency trading and lending platforms to dialogue with his commission, emphasizing that “getting these platforms into compliance with the securities laws will benefit investors and the crypto market.” Finally, the SEC chair concluded his article by saying:

“In the meantime, the SEC will serve as the cop on the beat. As with seat belts in cars, we need to ensure that investor protections come standard in the crypto market.”

Gensler has been criticized by many for adopting a hard stance and being “enforcement-centric” towards the crypto industry.