In a recent video, SEC Chairman Gary Gensler emphasizes crypto platform registration while facing criticism for past contradictory views and regulatory clarity issues in the U.S.
On April 27, Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), shared a video on Twitter in which he scrutinized the cryptocurrency sector. In the video, Gensler referred to crypto assets as “investment contracts” and encouraged platforms dealing in these products to register with the SEC to protect American investors.
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
Gensler explained that an investment contract materializes when an individual invests money in a joint venture, anticipating profits generated by the efforts of other participants. He insisted that the primary issue plaguing crypto markets is a lack of regulatory compliance, rather than a lack of regulatory clarity. Gensler also emphasized that the law is explicit in this regard: any entity operating as a securities exchange, clearinghouse, broker, or dealer must adhere to regulations and register with the SEC.
The SEC, under Gensler’s direction, has been at the forefront of the U.S. government’s efforts to regulate the crypto industry. Gensler has repeatedly stated that almost all crypto assets, excluding Bitcoin, should be categorized as securities. He contends that a large number of crypto businesses and platforms are violating securities laws if they fail to register with the SEC.
Past Remarks by Gensler Contradict Current Crypto Stance
Despite Gensler’s recent statements, several responses to his video highlighted his past contradictory opinions on the crypto market. Prior to his tenure at the SEC, Gensler had classified cryptocurrencies alongside cash and commodities, describing them as “non-securities.” This view stands in stark contrast to his current assertion that the majority of crypto assets should be treated as securities.
The inconsistency stems from a 2018 lecture titled “Blockchain and Money,” delivered by Gensler while he was a professor at the Massachusetts Institute of Technology (MIT). At the time, he suggested that 75% of the market comprised non-securities, identifying them as commodities, cash, and cryptocurrencies.
Another one – The below clip is from a Fall 2018 Graduate MIT course called "Blockchain and Money"
Gary Gensler – the current President of the SEC, was the professor.
Once again, I will let the below video speak for itself.
Lecture 8: Public Policy – October 1, 2018
— zk-🦈 (@ZK_shark) April 27, 2023
Gensler Faces Criticism for the SEC’s Approach to Crypto Regulation
In recent weeks, Gensler’s leadership and the SEC’s approach to cryptocurrency regulation have faced significant criticism. During an April 18 congressional hearing, lawmakers grilled Gensler, accusing the SEC of adopting a “regulation by enforcement” tactic.
At the hearing, Gensler had to share his thoughts on whether Ether, the second-largest cryptocurrency by market capitalization, should be classified as a security. He declined to provide a definitive answer on the subject.
The ongoing discourse surrounding cryptocurrency regulation in the United States underscores the challenges that regulators and legislators must confront. As the SEC persists in its efforts to regulate the crypto industry, the development of a comprehensive regulatory framework that addresses both investor concerns and the needs of the burgeoning crypto market remains uncertain.