Urgent Warnings and Need for Regulation
The Chairman of the U.S. Securities and Exchange Commission (SEC), Gary Gensler, made significant statements about cryptocurrencies in a Senate Banking Committee meeting. Describing the industry as a “wild west of fraud and abuse,” Gensler emphasized the need for regulation once again. The SEC Chairman stated that investors in the crypto market deserve the protection of U.S. securities laws.
“Given that most crypto tokens are subject to the securities laws, it follows that most crypto intermediaries have to comply with securities laws as well.”
Continuing his criticisms, Gensler also spoke about cryptocurrency exchanges: “If they complied with existing laws on investor protection, it would benefit these investors. Unfortunately, there is significant non-compliance at the moment. We need to combat fraud and abuse,” said Gensler, indicating that cryptocurrency exchanges need to comply with current legal rules on investor protection.
Questions Asked About Grayscale and Spot BTC ETF
Senator Bill Hagerty directed questions to SEC Chairman Gary Gensler about what the SEC needs to see for the approval of a Bitcoin Spot ETF. Gensler stated that they are still reviewing the decision and that there are multiple applications.
“We are still reviewing these decisions. We have multiple applications on hand… We are examining them and waiting for the team’s recommendations.”
These uncertain responses maintain the question marks regarding the SEC’s stance on cryptocurrencies and specifically on Bitcoin Spot ETFs. Gensler’s answer indicates that the possible approval of a Bitcoin Spot ETF is still uncertain and that no clear decision has been made on this issue yet.
About the Investment Contract Test and Crypto Tokens:
The SEC Chairman stated that the majority of crypto tokens meet the criteria of the investment contract test. This implies that such assets should be considered as securities.
”Given this industry’s wide-ranging non-compliance with the securities laws, it’s not surprising that we’ve seen many problems in these markets.”
Gensler’s stern and decisive attitude is seen as overly restrictive by the crypto community. Critics argue that this approach could hinder the growth of the sector and could even backfire.