- SEC chair Gary Gensler has brushed off regulatory concerns about operating a crypto company in the U.S.
- Gensler is demanding compliance from the sector and shows no signs of compromising.
- The SEC appears unconcerned about a crypto exodus, highlighting other emerging technologies as innovation leaders over blockchain.
The SEC’s recent crackdown on crypto companies has received backlash from some of the industry’s most prominent players, including Coinbase, Ripple, and Circle.
The head of the SEC, Gary Gensler, is not accepting complaints from the nascent sector and flat-out rejects the threat of a crypto exodus hurting innovation in the U.S.
On Tuesday, March 7, Gensler slammed crypto companies in the U.S. for not falling in line following the hardline crackdown. The SEC has recently gone after Paxos and its issuance of the BUSD stablecoin Kraken’s staking service and, most infamously Ripple, with which it is embroiled in a long-standing lawsuit.
Criticism of the SEC’s handling of crypto has been rife in recent days. Policing has been on the offensive rather than focusing on producing a clear framework to work towards. Nevertheless, in the Tuesday interview at the agency’s headquarters in Washington, Gensler asserted that: “The path to compliance is clear.”
Get In Line, or Get Out
Many disagree with Gensler’s compliance claims, calling for more straightforward legislation. Indeed, according to Ripple CEO Brad Garlinghouse, it is the lack of legal clarity around crypto that is forcing companies to flee U.S. shores.
Gensler’s response to the assumption that crypto companies cannot operate in the U.S.’s current framework was curt and matter-of-fact. He said:
“We lose more if investors get harmed here. It’s a basic bargain in finance: If you want to raise money from the public, disclose certain facts and figures.”
It appears Gensler is critical of crypto businesses as he feels these companies have a sense of superiority above the law.
Gensler said crypto businesses have fought against what typically happens when agencies come down on ‘bad behavior’ in financial markets. Instead of companies trying to comply with the SEC, “this is a field that seems to belie [compliance] in some circumstances,” he said.
Gensler: Europe Is Not the Answer
The arguments against the SEC’s approach in the U.S. have cited other nations setting clear legal frameworks for operating crypto businesses. The UK has been cited as a progressive nation for legislating crypto, as well as the EU with MiCA.
However, Gensler is critical of MiCA’s effectiveness.
“Do you know that MiCA doesn’t even cover Bitcoin?” The SEC Chair disclosed that the SEC has communicated with international counterparties, but his focus is “on how to best help the American public.”
On the Flipside
- Gensler admits that the SEC does not see blockchain and crypto as innovative or transformative. He emphasizes that the SEC is more excited about regulating “predictive data analytics and everything underlying artificial intelligence.”
Why You Should Care
The SEC seems immovable on its stance against crypto if Gensler’s comments are to be taken to heart. Should the U.S. continue to make it hard for crypto companies to comply, the route of least resistance would be to other global jurisdictions.
Read more about how Coinbase and Ripple are critical of the SEC:
Coinbase’s Brian Armstrong Joins Ripple CEO in Chastising SEC’s Approach to Crypto
Read about how Silvergate’s collapse is on the Whitehouse radar:
White House Eyeing Silvergate, Biden Wants Protection Against Crypto Risks