Gary Gensler gave testimony before the United States House of Representatives Committee on Financial Services this morning. He spoke about crypto assets as well as the intermediaries who handle crypto-related financial services.
Gary Gensler has been a vocal critic of cryptocurrencies. In his appearance today, he voiced his concerns regarding crypto and argued that investors need the essential protections offered by traditional securities laws. “Nothing about the crypto markets is incompatible with the securities laws,” he stated.
Gensler reiterated his opinion that most crypto falls under a single classification. “The vast majority of crypto tokens are securities,” he said. “It follows that many crypto intermediaries are transacting in securities and have to register with the SEC.”
Certainly, some crypto platforms have engaged in unsavory practices that break the rules of the SEC in the last two years. And to be fair, most investors and employees in the crypto sector want protection against fraud, manipulation, wash sales, and other misconduct. But not all crypto is the same, and assuming they all function the same way would be a mistake.
According to Gensler, crypto intermediaries provide a number of services that are usually provided by separate entities. These include exchange, broker-dealer, custodial and clearing, and lending functions. “The commingling of the various functions within crypto intermediaries creates inherent conflicts of interest and risks for investors—risks and conflicts the Commission does not allow in any other marketplace.”
He proposed more stringent regulations to regulate the sale and exchange of digital assets, as well as more clarity on who is responsible for regulating cryptocurrencies. He argued that the SEC should hold intermediaries accountable when it comes to digital asset securities.
Finally, Gensler said that the crypto market is “rife with noncompliance.” He called for additional enforcement authority from Congress. Though to do what exactly is still unclear.
Time will tell whether Gensler’s war on cryptocurrencies will continue to escalate or not. Some feel that he is overstating the dangers of crypto, while others agree with his stance. At this point, it is likely that Gensler will continue to push for more regulation and oversight of the digital asset market. Ultimately, it is up to Congress to decide whether to implement Gensler’s agenda.
In adherence to the Trust Project guidelines, BeInCrypto is committed to unbiased, transparent reporting. This news article aims to provide accurate, timely information. However, readers are advised to verify facts independently and consult with a professional before making any decisions based on this content.