Cryptocurrencies Can’t Undermine Capital Market Trust, Gensler Says
Since he sued Binance and Coinbase, the Chair of the SEC has been in the middle of a storm.
After suing Binance and Coinbase, Gary Gensler, the head of the U.S. Securities and Exchange Commission (SEC), has made it clear what he wants to do with the digital assets class. In a recent conversation, he said that these are securities and nothing else.
A CNBC report said that he said they should be registered with the agency before being offered to investors, or they should meet the standards for exemptions. He also said that exchanges that list cryptocurrencies must also sign up with the body in charge of regulating them.
Investment contracts are what crypto tokens are.
“Congress included a long list of 30-plus items in the definition of a security, including the term ‘investment contract’…. the vast majority of crypto tokens meet the investment contract test. … Thus, crypto security issuers need to register the offer and sale of their investment contracts with the SEC or meet the requirements for an exemption,” Gensler said.
On June 8, he spoke from a distance at the Piper Sandler Global Exchange and FinTech Conference in New York City.
“Hucksters. Fraudsters. Scam artists. Ponzi schemes. The public left in line at the bankruptcy court.”
This is how the Chair of the Securities and Exchange Commission (SEC) explained the current state of cryptocurrencies, comparing it to the time before the federal securities laws were made in 1933.
Gensler talked about the role of regulators in cryptocurrency trade. He said that unregulated crypto securities markets would hurt people’s trust in the capital market.
“The crypto securities markets should not be allowed to undermine the well-earned trust the public has in the capital markets. The crypto markets should not be allowed to harm investors,” he added.
The chair of the SEC also said that it hasn’t been clear whether crypto assets are stocks or not.
“When crypto asset market participants go on Twitter or TV and say they lacked ‘fair notice’ that their conduct could be illegal, don’t believe it. … They may have made a calculated economic decision to take the risk of enforcement as the cost of doing business.”
Suing Binance and Coinbase
The SEC sued Binance and Coinbase early this week, saying that there were problems with both of them. Binance is accused of selling unregistered assets like BNB and BUSD and running an unregistered securities exchange and broker-dealer in the US.
The case wants “ill-gotten funds” to be returned and the company to be banned from ever running a crypto and securities business in the US again. In response to the SEC’s civil action, the US District Court for the District of Columbia sent Binance CEO Changpeng Zhao (CZ) a summons. But CZ has been excused from having to show up in person.
In particular, it said that the funds, broker-dealer, and clearing house activities of the two exchanges were all mixed up. Binance was also accused of mixing up its customers’ money. In response to the news, Coinbase CEO Brian Armstrong said, Regarding the SEC complaint against us today, we’re proud to represent the industry in court to finally get some clarity around crypto rules.
