SEC’s Gensler States That “Adequate Laws in Place” for Crypto

The chair of the United States Securities and Exchange Commission (SEC), Gary Gensler, has hit back at Coinbase’s petition for clear crypto regulation, arguing that the agency has already published adequate laws.

In a keynote speech at the Financial Markets Conference on May 15, Gensler was asked about the dispute with Coinbase, the rules on crypto, and why “the SEC doesn’t publish rules for that market.”

In response, Gensler staunchly asserted that “the rules have already been published,” adding that:

“To make it quite direct: this is a field that has been operating largely non-compliant. […] There’s nothing about a new technology that makes it non-consistent with the public policies that congress has laid out.”

Gensler argued that the SEC has already put out the rules for what is required to custody assets, be an exchange, broker dealer or advisor and how to register securities offerings with the agency.

The SEC chair’s current view is that most crypto assets — apart from Bitcoin — fall under the securities definition of an investment contract.

“If the public is investing money and anticipating profit based upon the efforts of others, in a common enterprise, that’s a security,” he said, adding:

“There’s financial intermediaries, nodes in the network, and they need to come into compliance if they’ve got securities on their platforms.”

Coinbase — and many other U.S. crypto firms — have repeatedly spoken out against an apparent lack of clear crypto regulation and the SEC’s so-called “regulation by enforcement” approach to crypto, along with its hostile nature when dealing with digital asset firms.

In April, the firm went as far as to file an action in federal court seeking to compel the SEC to publicly disclose its stance on a petition from July 2022 calling for clear rules for the crypto sector.

Notably, the U.S. Chamber of Commerce has also echoed this call from Coinbase as it heavily criticized the SEC’s oversight via May 9 amicus brief.

“The SEC has deliberately muddied the waters by claiming sweeping authority over digital assets while deploying a haphazard, enforcement-based approach,” it stated.

Some have also speculated that Gensler’s tough stance on crypto is due to his desire to clear the path for a U.S.-backed Central Bank Digital Currency (CBDC).

“From a distance, it’s quite clear that Gensler has been deputized from above to clear the path for a US-backed Central Bank Digital Currency (CBDC) with all of the loss of privacy that this instrument entails,” said one observer.

Only time will tell how the SEC’s crypto regulation will play out, but it is clear that the agency is taking a hard line on the issue.