Despite claims that cryptocurrencies are not securities, Gary Gensler has stated that his organization will remain a “policeman on the beat” in terms of regulating the industry.
In his most recent opinion piece that was published in the Wall Street Journal, the U.S. The chairman of the Securities and Exchange Commission stated that he did not see any reason to treat the cryptocurrency market differently from traditional markets “just because it uses a different technology.” He stated that despite the fact that the federal securities laws in the United States are over 85 years old, they generally protect investors, including those in the cryptocurrency sector.
“We can do away with the notion that crypto financing is not subject to regulation. On the other hand, these regulations have been in place for some decades. However, the platforms aren’t keeping up with them. According to what Gensler noted, “noncompliance is not an inevitable byproduct of either the cryptocurrency business model or the underlying cryptocurrency technology.”
The former investment banker made the observation that recent market developments have demonstrated why cryptocurrency companies need to comply with securities rules. According to Gensler, who cited BlockFi as an example, “in recent months, a number of crypto lending platforms have either locked their investors’ accounts or gone bankrupt.” It was discovered that this cryptocurrency loan firm has borrowed over $10 billion in crypto assets from investors while promising them an attractive interest rate in return. According to Gensler, the steps taken by BlockFi transformed “BlockFi Interest Accounts” into a security. “BlockFi Interest Accounts” are the firm’s lending product. Additionally, BlockFi proceeded to package the pooled assets and issue them as loans to institutional borrowers. Additionally, BlockFi invested funds in other securities, thereby transforming itself into an investing company. Before receiving a call from the regulators, Celsius and Voyager Digital had likewise followed the same course of action. It is not the first time that Gensler has asserted that his organization need to be in charge of the administration of various cryptocurrencies like Cardano, Dogecoin, and others. However, as a result of his unyielding stance, he has ruffled the feathers of certain key people in the cryptocurrency industry. These individuals are of the opinion that he harbors nefarious intentions regarding the fledgling industry. In response to Gensler’s opinion piece, John Deaton, founder of Crypto Law, wrote a response in which he asserted that the head of the SEC was illegally beyond the boundaries of his jurisdiction. Since Congress had not passed any regulations to oversee the cryptocurrency sector since the Howey case, the only institution that was best suited for the role was the Commodity Futures Trading Commission (CFTC), according to his interpretation of the situation.
According to Deaton, “Gensler has utilized this apparent lack of clarity to unleash a campaign of regulation by enforcement — extending Howey beyond recognition.” “As a legal doctrine, it should worry everyone well beyond the crypto realm,” Deaton stated.