SEC chair Gensler highlights crypto firms non-compliance in house committee testimony
US Securities and Exchange Commission (SEC) Chairman Gary Gensler has accused crypto companies of violating existing securities rules.
April 18th testimony Speaking before the House Financial Services Committee, the chief of the regulator said, “There is nothing about the crypto market that is incompatible with securities law,” because most cryptocurrencies are securities.
Gensler Says Crypto Markets Are Riddled With Non-Compliance
Gensler said most crypto intermediaries combine multiple services offered separately by traditional financial institutions. This increases investor risk and explains why crypto companies, decentralized or not, must register with his SEC.
“Crypto intermediaries, calling themselves centralized or decentralized, often offer an amalgamation of services that are typically separated from each other in the rest of the securities market: exchange functions, brokers. Dealer functions, custody and clearing functions, and lending functions.The mix of different functions within crypto intermediaries creates inherent conflicts of interest and risks for investors, risks that the Commission does not allow in other markets It’s the opposite.”
Gensler further noted that non-compliance is rampant in the crypto industry, putting investors at risk and undermining public confidence in capital markets.
“It’s the law. It’s not a choice. Calling yourself a DeFi platform, for example, is no excuse to go against securities laws,” he added.
Gensler highlights how the SEC protects investors
Gensler highlighted several steps financial regulators have taken to bring the crypto industry into compliance. “The commission has directly discussed enforcement actions and a number of proposed rules with crypto market participants,” he said.
Gensler noted that the commission hopes to update the current investment advisor custody rules to “cover all crypto assets and increase the protection provided by qualified custodians.” .
In addition, the SEC has reopened the comment period and amended its definition of an exchange. However, the proposed amendment has received some criticism from cryptocurrency stakeholders.
SEC Commissioner Hester Pearce described the proposal as a way to “embrace stagnation, force centralization, encourage deportation, and welcome the death of new technologies.”
Post-SEC Chairman Gensler first appeared on CryptoSlate in testimony before a House committee, highlighting crypto companies’ non-compliance.
