SEC chair Gary Gensler accused the crypto industry of failing to meet regulatory requirements. The crypto community criticised him.
There is a lot of noncompliance in the crypto space. It undermines confidence when so many people have been hurt and all they can do is stand in line in the bankruptcy court. Further, this can make it hard for the good faith actors to compete. pic.twitter.com/9L1WKa4R6S
— Gary Gensler (@GaryGensler) December 21, 2023
“There is a lot of noncompliance in the crypto industry. It undermines trust, as many of those harmed can only stand in line in bankruptcy court. It can also make it hard for good-faith actors to compete,” he said.
In a comment to CoinDesk, the SEC chair noted that the industry has “far too many frauds and bankruptcies.” Despite “deep respect for investors,” Gensler questioned whether projects whose tokens investors buy disclose enough information.
“Investors must be vigilant and cautious; they must be prepared to lose 100% of their assets. If you can find a site and read about them on CoinDesk, you are probably betting on these entrepreneurs,” he explained.
According to the official, opinion leaders in the crypto industry have large social-media followings, and engagement with which continues around the clock.
Gensler also questioned the real value proposition of most tokens. Many projects are merely “speculative investment contracts,” he noted.
“If there is something good, we can understand it. What is the value proposition of owning a decentralised token?”, he said.
Coinbase has repeatedly tried to obtain clarifications on industry compliance.
“SEC did not take a clear position and relied on regulation through enforcement,” an X post notes, citing Reuters and Forbes.
Co-founder of the meme cryptocurrency Dogecoin, Billy Markus, said that Gensler “never laid out real rules” and called him “useless in every respect.”
bro you’ve never laid out any actual rules, you just hand wave
you’re basically useless in every single way
— Shibetoshi Nakamoto (@BillyM2k) December 21, 2023
“Stunning hypocrisy from the person who cozied up to the biggest fraud in recent memory. Gensler is a political liability whose actions have decimated consumers and destroyed the integrity of the SEC, while remaining buddy-buddy with Wall Street”, wrote Brad Garlinghouse, head of Ripple.
Stunning hypocrisy from the person who cozied up to the biggest fraud in recent memory.
Gensler is a political liability whose actions have decimated consumers and destroyed the integrity of the SEC, while remaining buddy-buddy with Wall Street. https://t.co/hAgjJ9IsGR https://t.co/D3pz4Dq3yy
— Brad Garlinghouse (@bgarlinghouse) December 21, 2023
In 2023, American politicians and crypto-industry figures repeatedly criticised the head of the SEC and the agency as a whole. In January, Grayscale Investments CEO Michael Sonnenschein accused the Commission of dragging its feet on regulating the industry.
In April, SkyBridge Capital CEO criticised Gensler for the “disarray” at the SEC. In the same month, the official came under fire from Republicans during Congressional hearings for an undefined position on cryptocurrencies.
In June, lawmakers introduced a bill to remove Gensler. In August, after Grayscale’s victory in court against the SEC, the proposal to replace the agency’s head was floated again.
In December, US presidential candidate Vivek Ramaswamy criticised Gensler’s work and pledged to significantly cut the Commission’s staff if elected.