Securities and Exchange Commission (SEC) Chairman Gary Gensler will reiterate his stance on the cryptocurrency regulatory landscape today (10:00 a.m. ET) during a highly anticipated appearance before the Senate Banking Committee. According to his pre-release testimony, Gensler remains steadfast in his belief that most crypto assets fall within the SEC’s purview and should be considered securities.
Gensler will emphasize that “there is nothing in the cryptoasset securities market to suggest that investors and issuers do not deserve the protection of our securities laws.” He further elaborated on the historical context, noting that Congress did not include securities in the Securities Acts of 1933 and 1934. The definition is limited to stocks and bonds. Instead, they laid out an extensive list of more than 30 items that included the term “investment contract.” “As I said before, without prejudging any one token, the vast majority of crypto tokens will probably meet the investment contract test,” Gensler said.
Gensler will maintain his stance on cryptocurrencies
This view is consistent with Gensler’s long-standing view that most cryptocurrency intermediaries should comply with securities laws. He emphasized that “given that most tokens are subject to securities laws, most cryptocurrency intermediaries must also comply with securities laws.”
“Given the widespread noncompliance with securities laws in this industry, it’s not surprising that we’re seeing a lot of problems in these markets compared to the past,” Gensler said. “We’ve seen this story before. It’s very reminiscent of the 1920s. prior to the implementation of federal securities laws.” He also noted the SEC’s proactive approach to addressing these issues, citing enforcement actions to ensure investor protection and rulemaking initiatives targeting the cryptocurrency security market.
However, Gensler will make it clear that he will not comment on the ongoing litigation during the hearing.
The hearing comes against the backdrop of a series of recent court rulings that have challenged the SEC’s stance on Bitcoin and cryptocurrency regulation. Notably, Grayscale scored a victory in August when a DC Circuit judge ordered the SEC to re-evaluate the asset manager’s Bitcoin spot ETF application. Likewise, Ripple Labs scored a partial victory when Judge Analisa Torres ruled that some of Ripple’s XRP sales did not violate securities laws, while other direct sales to institutional investors were considered securities.
In addition, the SEC’s recent legal disputes with major exchanges such as Coinbase and Binance have also become the focus of discussion in the industry. The two companies are facing lawsuits from the U.S. Securities and Exchange Commission for failing to register.
Despite these setbacks, Gensler will remain steadfast in his belief that the SEC should oversee the cryptocurrency industry. He will testify today at 10:00 AM ET and is expected to reiterate the SEC’s position. Especially the Q&A session after the presentation will be interesting. How will Gensler respond to the loss to Grayscale on the Bitcoin spot ETF? How will Gensler respond to questions about the crypto regulatory impasse?
At press time, BTC has quickly rebounded from yesterday’s decline below $25,000 and is trading at $25,777.
Featured image from Financial Times, chart from TradingView.com