Just In: SEC Chair Reprimands Crypto Firms On Securities Law
Gary Gensler, the Chairman of the United States Securities and Exchange Commission (SEC) has shared a recent insight into what is expected from crypto firms calling for comprehensive regulation. In a recent message with an accompanying video illustration posted on his official Twitter handle, Gensler said the securities law in the US cares more about what something is, and not what one calls it.
The SEC Chairman has been accused of leading the Commission with his regulation by enforcement tactics, a system that has been called out by both lawmakers and leaders in the cryptocurrency ecosystem. Despite these criticisms, Gensler is unfazed, and maintains that the current securities laws in the US are sufficient to guide the nascent Web3.0 world.
Clarifying the misconception about most crypto assets receiving the tag of securities, Gensler said the definition of securities as given by Congress features 30 different things including stocks and investment contracts. The Investment Contract entails putting funds in a common enterprise with a reasonable expectation of profits derived from the efforts of others.
Intermediaries for investment contracts are required to comply with securities laws & register with @SECGov.
Instead, many crypto platforms are contending that their investment contracts are something else.
The law cares about what something actually is, not what you call it.
— Gary Gensler (@GaryGensler) April 27, 2023
The top regulator said the intermediaries for these investment contracts which also includes exchanges need to come under the securities laws.
Dissenting Views on the SEC Chair Position
Beyond the video message that has just been shared, the position of the SEC Chair is not a new one, and there are a lot of oppositions to his claims that the current securities laws are sufficient for the crypto exchanges.
One of the rationale is that the major maker of what constitutes a security is the Howey Test which was developed decades ago. Market leaders are advocating the development of a whole new law that will be flexible and fitting for the nature of innovation that are embodied by blockchain and their attendant innovations.
Coinbase, the largest crypto trading platform in the US has dragged the SEC to court for failure to provide clearer regulatory guidelines for the industry. While many have hailed the exchange for taking such proactive stance, there has been a growing call for the removal of Gary Gensler with the US Lawmaker
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