• SEC Chair Gary Gensler addressed the ongoing regulatory issues surrounding the cryptocurrency industry in a speech, rejecting arguments for “regulatory clarity.”
• Gensler cited Congress’s purpose in enacting securities laws and Supreme Court cases that define digital assets as securities.
• He also discussed how the SEC is providing clarity with enforcement actions against those who are not compliant.
SEC Addresses Regulatory Issues Surrounding Crypto
SEC Chair Gary Gensler recently addressed ongoing regulatory issues surrounding the cryptocurrency industry at length during a speech at the Piper Sandler Global Exchange & Fintech Conference on June 8th. In his remarks, Gensler rejected arguments for „regulatory clarity“ and defended his agency’s enforcement actions.
SEC Cites Relevant Laws and Cases
Gensler noted that Congress’s purpose in enacting the securities laws was to regulate investments, regardless of form or name. He quoted Justice Thurgood Marshall from Reves, which includes 30-plus items in its definition of a security such as ‚investment contracts‘. Citing Supreme Court case SEC v. WJ Howey Co., he argued that it is flexible when defining a security and can include any contract if it meets certain criteria such as investment of money or expectation of profit from others‘ efforts.
SEC Provides Clarity with Enforcement Actions
Gensler asserted that while many argue there should be more clarity around crypto regulations, this ignores existing laws and regulations governing digital assets. He explained that instead of pushing for more regulation, the crypto community should focus on compliance with existing rules and regulations related to digital assets being treated as securities. The SEC has been providing clarity by taking enforcement action against those who do not comply with these rules and regulations.
„Vast Majority“ Meets Investment Contract Test
Gensler went on to state that „the vast majority of crypto tokens meet the investment contract test“. This means they would be treated as securities under existing law and therefore subject to federal regulation by agencies like the SEC. He concluded by stating that disagreement with this message does not mean it was not heard loud and clear by all involved in trading digital assets – especially those expecting clear regulatory guidance before entering into transactions involving cryptocurrencies or other digital assets deemed to be securities under U.S law.
In conclusion, Gensler made it clear during his address that existing laws are adequate to govern digital asset activity; rather than seeking additional clarity around crypto regulations, those involved in trading digital assets should focus on compliance with rules already in place so that they may remain compliant with U.S law regarding security treatment of cryptocurrencies or other digital assets deemed as such under said law