- The SEC chair, Gary Gensler, will answer questions on his crypto regulation at an April hearing.
- Ahead of that hearing, Gensler has stuck to his guns on the current legal framework for crypto.
- Gensler is blaming crypto and the ‘Wild West’ ecosystem it operates in.
The SEC’s policing of the crypto space has been relatively unfettered since the collapse of FTX in November last year. However, the chair of the regulatory body, Gary Gensler, will be called to explain his approach in a Congressional hearing on April 18.
Ahead of that hearing, Gensler testified at the House Appropriations Subcommittee on Financial Services and General Government on Wednesday, March 29. When questioned about issuing rules to clarify how securities law applies to digital assets, the chair was adamant.
“The regulations actually already exist, sir. They’re called the securities regulation, and so there are disclosure regulations for when somebody tries to raise money from the public,” the SEC chair said in response to Congressman Sanford Bishop’s question.
The Wild, Wild West
Gensler has not shown any signs of backing down from his tough stance on crypto, believing that the broad securities law at his back offers him all the jurisdiction he needs. The only firm position Gensler has taken is that Bitcoin does not fall under his department’s rule.
“Crypto tokens—without prejudging any one of them—you could look at nearly, most of them, and you could find a group of entrepreneurs with a Twitter site, with a website, with individuals, and I can bet that most of you are not visited by decentralized, non-existent management,” he added.
Gensler is also taking on the mantle of “Sherrif” of the Wild West of crypto, concerned that the industry is still “rife with non-compliance.” His department has already aimed at some of the biggest crypto businesses, like Coinbase, Ripple, and Gemini.
The crackdown on these companies has caused a backlash, with many CEOs speaking out against the SEC’s regulation by enforcement. Coinbase’s CEO Brain Armstrong has gone so far as to call for a new political regime to protect crypto in the U.S.
Called to Order
Perhaps due to the backlash, Gensler will have to answer for his approach when he faces the House Financial Services Committee (FSC) for the first time in April. Representative Patrick McHenry, chairman of the FSC, stated the hearing would be focused on Gensler’s rulemaking and approach toward crypto assets.
The hearing also looks to be set up to give Republicans a chance to hold the SEC responsible for how it has impacted the crypto ecosystem in the U.S. thus far.
Even with this hearing looming, Gensler appears steadfast in the belief he is acting in the best interest of the U.S. and its people. He maintains the rules are clear and that crypto companies are acting with disregard for the rules.
On the Flipside
- Gensler also said that of the thousands of crypto tokens out there, very few are decentralized enough not to have “a group of entrepreneurs in the middle that the public is counting on.” which quickly brings them under securities law.
Why You Should Care
While there is a long way to go in the U.S. for clear and codified crypto regulation, the fact that the chief enforcer is being questioned on his approach is a good first step to a more balanced approach to crypto regulation.
Read more about the SEC’s hardline stance on crypto regulation:
SEC’s Gensler Slams Crypto Companies: “Path to Compliance Is Clear.”
Read more about the removal of Signature Banks’ crypto business:
Signature’s Crypto Clients Told to Close Accounts as FDIC Ends Business.