When Gary Gensler, chairman of the Securities and Exchange Commission (SEC), took up his current position in April, the crypto industry changed its stance on federal cryptocurrencies and digital assets, which were hostile during his predecessor’s tenure. I was expecting. He disappointed them.
- SEC Chairman Gary Gensler criticized the crypto industry in his Senate testimony on Tuesday.
- He said DeFi is decentralized by name alone, and the “very many” tokens traded in the crypto market are securities.
- Gensler also revealed that despite his criticism, he was not negative about cryptocurrencies.
- He said his agency was understaffed and could spend more money.
Gensler outlined new concerns, not only calling the industry the “Wild West”, but also taking every opportunity to insist on his claim to put the industry under the supervision of his institution. In a testimony at the Senate Banking Commission on Tuesday, the SEC chief again repeated these issues, insisting on keeping the awkward industry under scrutiny.
Most of Gensler’s assessments of the situation in the cryptocurrency industry were negative. According to the SEC Chief, securities are not the only “minority” of cryptocurrencies currently traded on the crypto market. “There are so many people,” Gensler said. This includes stablecoins, a type of cryptocurrency whose price is fixed to fiat currencies, or a basket of assets to minimize price fluctuations.
When asked why stablecoin was classified as a security, Gensler pointed out the “35 different things” defined as security in the Securities Act of 1933. As outlined in the Supreme Court’s ruling to define securities, the cryptocurrency industry is sticking to the Howie test, but the law is actually multiple, including investment contracts, collateral trust deposits, and certificates of deposit. It defines securities in the form.
This year, the popularity of decentralized finance or DeFi tokens and services has exploded. However, Gensler said the services are decentralized by name alone, and user contracts for such services obscure additional charges and charges that are not apparent to customers. He agreed that DeFi and crypto tokens are a “very speculative asset class” and that Massachusetts Democratic Senator Elizabeth Warren agrees that the high and unpredictable charges for DeFi services “danger crypto.” “Exposure to” said.
During the hearing, Gensler also aimed at the coin base, North America’s largest cryptocurrency exchange in terms of trading volume. Coinbase Global, Inc. Brian Armstrong, CEO of (COIN), accused the SEC last week of “really sketchy action” for refusing to reveal why tokens for loaned goods were classified as securities. He also said the agency “created an unfair market” threatening to sue for crypto exchange.
“You may have dozens of tokens, which are securities,” Gensler said on the trading market. “But those people [Coinbase] It is not registered with the SEC, “which means that Coinbase is not subject to the same disclosure scheme as any other exchange registered with an agency.
Despite his relentless criticism of the crypto industry, Gensler has revealed that he is not “negative or minimalist” about cryptocurrencies. “If the area I studied at MIT for 3.5 years stays outside the framework of public policy for money laundering prevention (AML), investor protection and tax evasion … it won’t last,” he said. ..
Need more funding and coordination
Even when he insisted on greater cryptocurrency, Gensler demanded more money for his agency. He came to the agency at an important time of his existence. Technology has undermined previous rules for capital market formation, and the advent of meme stock traders has overturned investor protection. According to Gensler, his agency is currently working on 6,000 projects and is understaffed. “On the financial side, we can spend more people,” he said.
Regarding cryptocurrencies, he said, better coordination between market regulators is needed. For example, to establish a regulatory framework for Stablecoin, his institution needs to coordinate its efforts with banking institutions. “And there are some weeds, such as infrastructure and management. [for digital assets]I think we can work with Congress to clarify. ”