SEC’s Gensler rejects ‘regulatory clarity’ arguments in speech on crypto regulation
in preparation remarks At the Piper Sandler Global Exchange & Fintech Conference on June 8, SEC Chairman Gary Gensler elaborated on the ongoing regulatory issues surrounding the cryptocurrency industry, stating: He defended the agency’s enforcement action, arguing that there was no merit in the cryptocurrency community’s support for “regulatory clarity.”
Gensler said his approach was blunt and reiterated the notion that existing securities laws are inadequate to govern digital assets.
“The purpose of Congress in enacting the Securities Act was to regulate investment in whatever form it was made and by whatever name it was called,” said Gensler. citing Judge Thurgood Marshall’s judgment in the case.
“Congress has included a long list of over 30 items in the definition of a security, including the term ‘investment contract,'” he continued, noting that the Supreme Court has changed the definition of a security. He said he showed flexibility. SEC v. WJ Howey Co.: “It embodies flexible rather than static principles that can adapt to meet the myriad changing schemes devised by those who seek to take advantage of other people’s money with the promise of profit.”
He also refuted claims that 1930s securities laws could not encapsulate blockchain technology.
“Satoshi Nakamoto’s innovations have spurred the development of crypto-assets and their underlying blockchain ledger technology. When a home puts money at risk, it’s the economic reality of the investment that counts.”
“Economic Reality”
In his speech, Gensler stressed that the language used to label an investment contract does not change its nature. “Throughout decades of litigation, the Supreme Court has made it clear that the economic reality of a product, not the product’s label, determines whether it is a security under securities law,” he said. .
Referring to the “fair notice” claim, Gensler warned against dishonest tactics employed by some crypto market participants. “Don’t believe crypto market participants who claim on Twitter or on TV that they didn’t have ‘fair notice’ that their actions may be illegal,” he said. Stated. They may have made a calculated economic decision to take the risk of enforcement as a cost of doing business. “
Still, in his speech, the SEC chair gave room for the crypto sector to comply with U.S. law, refuting the notion that compliance would be “impossible” under existing rules.
“While I disagree with the notion that crypto intermediary compliance is impossible, recent history has disproved it. We think it’s appropriate, it’s not just a matter of “giving lip service.” [the] We want to comply with applicable laws,” or seek repeated meetings with the SEC that we will not make the necessary changes to comply with securities laws. “
