Gary Gensler states that cryptocurrency does not require any guidance

by | Sep 18, 2022 | Market, Market News, News | 0 comments

Gary Gensler, chairman of the United States Securities and Exchange Commission (SEC), said on Thursday during a speech that the cryptocurrency business does not need any particular legislation for enterprises that are issuing tokens. Gensler said that the norms and regulations that crypto issuers and service providers are required to follow have been apparent for years, and he framed the problem as one that relates to investor protection.

What did Gary Gensler state?

According to the prepared comments that Gensler delivered to the Practicing Law Institute, he said that “there is nothing about the crypto markets that is incompatible with the securities rules.” Regardless of the technology that is behind an investment, “investor protection is just as vital.”

His remarks are perhaps the clearest indication yet that the SEC intends to continue applying existing rules and regulations to the cryptocurrency industry. This is in contrast to the hopes of investors and entrepreneurs that the agency will create some kind of carve-out that will allow startups to issue tokens without having to register as a securities platform. His remarks are perhaps the clearest indication yet that the SEC intends to continue applying existing rules and regulations to the cryptocurrency industry.

Gensler’s take on crypto transactions

In his speech, Gensler also restated his belief that “most crypto tokens are investment contracts,” and he referred to previous publications of the SEC, such as the DAO report and the Munchee order, as examples of models that software developers and business owners can and should model their practices after.

These comments were repeated by Gary Gensler in an interview that CoinDesk had with him in advance of his address a few days ago. According to him, there are over 10,000 different cryptocurrencies that are listed on CoinMarketCap. These cryptocurrencies have varying degrees of liquidity and value, but they are all being invested in using very similar strategies.

Later on in his presentation, Gensler aimed at several middlemen in the cryptocurrency space, analyzing both controlled and decentralized platforms. Whether centralized or decentralized, all intermediaries of crypto are an amalgam of services.

Gary Gensler

Opinions of the platforms

Gary Gensler said that these trading platforms manage order books and enable transactions in cryptocurrencies, which may be considered securities. He suggested that these trading platforms should adhere to standards that safeguard their customers. This last characteristic is the reason that results in platforms turning into brokers.

As a further illustration of how these initiatives may be comparable to conventional securities platforms, Gensler cited the employment of lawyers to represent crypto companies. Gary Gensler alluded to the SEC’s previous enforcement efforts, which have mostly focused on token issuers when asked if the SEC would launch enforcement proceedings against trading platforms that failed to voluntarily register with the agency.

Discussion on threats and subsequent security

During his chat, he underscored the potential threats faced by investors, stating that numerous companies had declared bankruptcy and restricted access to customers’ assets as a result. According to him, user access to their cash has been restricted by even those businesses that have not yet filed for bankruptcy.

He said that there are fundamental safeguards built into our securities rules that protect investors from occurrences such as those. If you invest in any of these service providers or platforms, you will not get the fundamental safeguards that protect you against fraud, manipulation, and the practice known as front-running.

Gary Gensler provided an example of how firms may register with the agency by referring to the settlement that the SEC reached with cryptocurrency lender BlockFi. However, he refused to talk about any other particular companies.

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