Securities and Exchange Commission Chairman Gary Gensler says: The ‘vast majority’ of crypto assets are securities but it has not been determined how to determine if there are any.
According to Gensler’s written testimony, which is expected to appear before the U.S. Senate Committee on Banking, Housing, and Banking tomorrow, the adoption of decades-old securities laws is key to ensuring the United States’ continued financial leadership. in technologies and business models.
Gensler and the SEC are beating the crypto markets, supporting the need for crypto assets to be registered as securities.
But the SEC has faced criticism from crypto industry advocates, who condemn the lack of regulatory guidance and the SEC’s ‘regulation-by-enforcement’ approach.
The agency has launched an investigation into Coinbase, the largest crypto exchange in the US, for allegedly offering unregistered securities to its clients. It is also locked in a protracted legal battle with the crypto asset XRP issuer Ripple Labs and its top executives for offering unregistered securities. Digital asset manager Grayscale recently sued the SEC for denying an application to convert its bitcoin trust into a spot bitcoin ETF.
progress on registration side
But the progress is promising. While Gensler did not mention any guidelines other than the famous Howe test to determine whether a cryptocurrency is a security, he asked SEC staff to register separately for the various services they provide to exchanges. Given that some exchanges simultaneously act as broker-dealers or custodians. He believes this approach will help protect investors.
Still, not everyone is thrilled by the lack of clarity in determining whether a crypto asset is a security. In response to Gensler’s testimony, a Twitter user @djdhrubs Told“Same old crap as he said last year, popped up again. Won’t answer whether ETH is a security. Confusion remains.”
Gensler has asked SEC staff to help the platform register tokens as securities under existing securities laws and to recommend ways that security tokens can coexist with non-security tokens. can be. He does not oppose crypto intermediaries such as broker-dealers and exchanges that have concurrent registration with the SEC and the Commodities and Futures Trading Commission.
Gensler’s increased workforce in the SEC may partly come from the recent formation of the “Office of Crypto Assets,” an office that falls under the Division of Corporate Finance’s Disclosure Review Program (DRP). The new office was created to provide the agency with new resources and expertise to process filing issues related to crypto assets.
The SEC quickly agreed that bitcoin is not a security. The classification of ether as a non-security came after a former SEC official during the Trump-era, who said that ether may have started as a security when it was used to raise funds, It has since been turned into something that is now ‘decentralized enough’. ‘ to drop the title.
Gensler Prioritizes Investor Safety
Gensler’s mantra with respect to crypto so far has been investor protection. “Investors deserve disclosure to help them sort out between investments they think will flourish and those they think will fail. Investors have a right to be protected from fraud and manipulation,” he said. Said in a speech on September 2022.
The SEC has repeatedly rejected applications to allow exchange-traded funds to directly track the price of bitcoin, fearing that manipulation of the underlying market could put investors at risk. . Instead, it has supported the launch of some notable bitcoin futures exchange-traded funds to help investors gain exposure to bitcoin without owning the asset.
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