SEC Chairman Gary Gensler Lays Out Regulatory Responsibilities Around Crypto

SEC Chair Gary Gensler hinted that the SEC might exempt the crypto market from certain securities laws.

By Shomik Sen Bhattacharjee | Updated: 19 July 2022 14:12 IST

SEC Chairman Gary Gensler Lays Out Regulatory Responsibilities Around Crypto

Photo Credit: Reuters/ Jose Luis Magana

Gary Gensler has outlined what to expect from the securities watchdog on crypto regulation

Highlights

Gensler wants to engage the crypto industry to work within the law
The SEC could exempt crypto companies from a few securities laws
Gensler also laid out the SEC's future responsibilies

The US Securities and Exchange Commission (SEC) chairman Gary Gensler said the commission might tailor securities laws for crypto companies to comply. In an interview, Gensler said the commission has “exemptive authorities” to tailor its investor protection and disclosure laws. Gensler continued that several crypto companies have been non-compliant in offering unregistered securities. However, he did not reveal the crypto firms that violated this law. The SEC chief Gary Gensler also spoke about stablecoins and compared them to poker chips.

Gensler in an interview with Yahoo Finance said, "If you are raising money from the public, and the public is anticipating profits based on the efforts of that common enterprise, that's a security.

Gensler's recent statement is one of the clearest points he has made on how the SEC could work with crypto firms. "There's a potential path forward. I've said to the industry, to the lending platforms, to the trading platforms: 'Come in, talk to us,'" Gensler said.

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The SEC chairman gave examples of crypto firms like BlockFi that the commission has taken action against because they broke the securities law.

According to him, the US Congress might have to introduce new regulatory frameworks "to ensure financial stability."

In his view, stablecoins are like money market funds because people can earn returns with how they are used. Terra's UST implosion has increased talks about the need for stablecoins regulation.

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Meanwhile, Gensler advised investors to be cautious regarding projects promising exorbitant returns. "If it is good to be true, maybe it is…A lot of risks may as well be embedded in there," Gensler said.

Three major crypto firms, Three Arrows Capital, Voyager Digital, and Celsius Network, have filed for bankruptcy due to their inability to meet their obligations to their creditors and users.

Speaking about the future responsibilities of the SEC, Gensler said that they will soon have the leading role in regulating digital assets. He talked about their main aim, protecting the investors, and how they will ensure it. While he also said that the SEC has special powers from Congress, so they will exercise them to protect the investor.

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