In a recent social media post, U.S. Securities and Exchange Commission (SEC) Chairman Gary Gensler said that by law, crypto assets are investment contracts and platforms offering them need to register with the SEC.
Last Friday, we @SECGov voted to issue a supplemental release to our January '22 proposal requiring significant trading platforms to come under important rules for the markets. I believe this would help address comments from crypto & other market participants.— Gary Gensler (@GaryGensler) April 19, 2023
Read my statement:
Intermediaries must comply with securities laws and be registered with the Commission. Many platforms may think that the investment contracts they offer are something else, but regulations define what they actually are, regardless of how they are labeled.
Gensler emphasizes that an investment contract exists when you invest your money in an ordinary business with the reasonable expectation that the efforts of others will pay off. The cryptocurrency market suffers from non-compliance with regulations. This is not because the regulations are unclear.
The law is clear, if you are a stock exchange, clearing house, broker-dealer or trading platform, you must comply with it and register with us.
The SEC’s crackdown on crypto platforms that do not comply with securities laws is a hot topic of late. According to Gensler, the SEC’s goal is to ensure that investors are protected while promoting innovation in the financial sector. In recent years, the SEC has seen an increase in enforcement actions against crypto platforms that violate securities laws.
Last year, the SEC charged blockchain platform Ripple Labs with an unregistered securities offering, saying Ripple’s XRP token was a security. The case is still pending, and Ripple has been pushing back against the SEC’s allegations.
This year, the SEC has been investigating popular cryptocurrency exchange Coinbase’s lending schemes. Coinbase recently announced that it would cease the program due to regulatory pressure from the SEC.
Crypto platforms are facing increased scrutiny from regulators around the world, with many countries developing regulations to govern the crypto market. In the United States, the SEC has taken a proactive approach to asserting its authority over crypto assets and platforms.
The SEC’s actions have not been without controversy, with some in the crypto industry criticizing the commission for stifling innovation and hindering the development of the crypto market. Gensler, however, defended the SEC’s actions, saying they are necessary to protect investors and ensure that crypto markets operate within the framework of securities laws.