Gensler backs SEC’s push to regulate the bitcoin industry

Most cryptocurrencies are securities and fall under the jurisdiction of the SEC. This follows from the testimony by the agency’s chairman Gary Gensler for the Senate Banking Committee hearings.

In his view, the overwhelming majority of digital assets meet the definition of investment contracts and should be regulated under securities laws.

Accordingly, intermediaries operating in the crypto markets, such as brokers, dealers, or clearing agencies, are required to register with the Commission, Gensler noted.

“Given the broad non-compliance by this industry with securities laws, it is not surprising that we have seen many problems in these markets. History repeats itself. It reminds us of what we had in the 1920s before the adoption of the relevant federal laws,” said the head of the SEC.

He noted that the agency has taken a number of enforcement actions. Some have been resolved, others are the subject of litigation. According to Gensler, these proceedings are aimed at holding violators accountable and protecting investors.

As examples of rulemaking, the Commission chair cited the development of guidance for crypto trading platforms, including DeFi systems, as well as the formulation of requirements for qualified custodians of digital assets.

The Commission put on its list of priorities for 2023 the regulation of the crypto industry.

In July the SEC suffered partial defeat in the Ripple litigation, which has been ongoing since December 2020. However the Commission filed an appeal.

In August the court issued a ruling in favor of Grayscale Investments, ordering the regulator to overturn its decision denying approval to convert the company’s Bitcoin Trust into an ETF. This verdict is not final either.

Since June the agency has been pursuing civil actions against the world’s largest crypto exchanges Binance and Coinbase. However, in the testimony prepared for the Senate committee, Gensler noted that he would not comment on past or current SEC litigation.

Earlier in April, the head of the Commission stated that cryptocurrencies are securities, and the law excludes other interpretations.

In August the SEC for the first time classified non-fungible tokens as investment contracts.