Gary Gensler: Rules for regulating crypto firms in the United States already exist

The activities of cryptocurrency companies should be regulated in accordance with securities laws. This was stated by SEC Chair Gary Gensler during a hearing of the U.S. House of Representatives Appropriations Subcommittee.

“In fact, the rules already exist […]. They are called ‘securities regulation’. There are also disclosure rules — when someone tries to raise money from the public,” the official said.

Georgia Democrat Sanford Bishop asked Gensler about the Commission’s readiness to issue a ‘regulatory act clarifying the application of securities laws to cryptocurrencies’.

In response, the head of the SEC said that the regulation mentioned by the congressman does not require clarification. In his words, the market is governed by investor protection rules, though the industry is rife with ‘non-compliance with the law’.

Gensler reiterated his position that the vast majority of digital assets, with the exception of Bitcoin, fall under the definition of securities.

“Behind almost all cryptocurrency tokens, without bias toward any particular one, lie groups of entrepreneurs […], and I would wager that most of you do not encounter decentralised, non-existent leadership,” he explained.

In 2023, the SEC flagged violations atCoinbase, Kraken, Gemini and Genesis.

In March, Gensler proposed that tokens on the Proof-of-Stake consensus algorithm could be considered securities under U.S. law.

A month earlier, the head of the agency hinted at the possibility of recognizing all cryptocurrencies, except Bitcoin, in this status. His position was criticised by industry lawyers.

Earlier, Gensler described the cryptocurrency market as centralised. He urged platforms to approach the SEC about declaring a given asset an investment contract. He also warned of possible prosecution of unregistered Bitcoin exchanges.

Coinbase chief Brian Armstrong called the regulator’s policy detrimental to the U.S. financial sector.