- SEC Chair Gary Gensler faces a committee hearing today, April 18.
- His testimony indicates that the SEC is ready to double down on crypto regulation.
- DeFi Platforms may be next in the firing line for the SEC.
SEC chairperson Gary Gensler will be called today, April 18, to testify on his ‘regulation by enforcement’ of the crypto space. Ahead of the House Financial Services Committee hearing, Gensler’s testimony has been made available, and it is not good reading for crypto.
Gensler has reiterated his stance that “most crypto tokens are securities.” He has also explained that a recent proposal updating the investment adviser custody rule would allow the SEC to “cover all crypto assets and enhance the protections that qualified custodians provide.”
Not Backing Down
Despite the pressure on Gensler from Congress, other U.S. Representatives, and crypto businesses, the chair is working harder to gain more regulatory control over the crypto space.
In his testimony, Gensler outlined his mandate since the fall of FTX:
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“Congress gave the Commission a mandate to protect investors, regardless of the labels or technology used. Nothing about the crypto markets is incompatible with the securities laws. As I’ve said numerous times, the vast majority of crypto tokens are securities.”
To codify more control over different crypto assets, as well as exchanges and businesses that operate with digital assets, Gensler is working to adjust current rules and legislation.
In Gensler’s words, changes to the custody rule would mean: “advisers would receive the time-tested protections that they deserve for all of their assets, including crypto assets.
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Moreover, on April 14, the SEC proposed expanding the definition of an “exchange,” clarifying that its existing rules on exchanges should also apply to DeFi platforms.
The SEC and Gensler appear relentless in bringing crypto under their control, honing in on different sectors – such as Stablecoin with the BUSD shutdown and now DeFi.
Gensler said specifically: “Calling yourself a DeFi platform, for instance, is not an excuse to defy the securities laws. Right now, unfortunately, this market is rife with noncompliance.”
On the Flipside
- The SEC’s hardline regulation of the crypto space has led to many U.S.-based crypto companies acting proactively. Binance.US recently delisted TRX after the SEC decided to go after TRON founder Justin Sun.
Why You Should Care
The SEC has behind it a mandate from Congress that it feels is fulfilling. It will be difficult for the regulatory body to be swayed off course as crypto does require regulation. However, the regulation’s application should still be flexible and worked upon.
Read more about Gensler’s beliefs on the current crypto regulation:
SEC Chair Gensler Insists Crypto “Regulations Already Exist” Ahead of Hearing.
Read more about Ripple’s MoneyTap app in Japan:
Ripple’s MoneyTap Payment System Big in Japan: Three Banks Add Support.
