The chair of the US Securities and Exchange Commission (SEC), Gary Gensler, has outlined a plan to regulate the cryptocurrency industry. Gensler said that the commission was working on a plan to register most initial coin offerings (ICOs).
The SEC is also planning to regulate cryptocurrency exchanges while adding that the largest number of coin offerings fell under the regulatory jurisdiction of the SEC’s securities law.
SEC Chair plans to regulate crypto
Gensler was giving a speech at the Congressional budget request questioning for both the SEC and the Federal Trade Commission (FTC), saying that crypto tokens will fall under the regulatory scrutiny of the SEC, and compliance will be achieved by using enforcement tools.
The SEC said that the unregulated crypto landscape made the sector risky to all communities. Gensler was addressing whether the black minority was at a higher risk of losing more from cryptocurrency investments.
Gensler also addressed the volatility of the cryptocurrency space, saying that the commission had oversight over the issuance of these tokens. The cryptocurrency market has witnessed massive growth over the years, and currently, there are more than 10,000 tokens in the market.
Gensler also addressed the issue of most cryptocurrencies in the market being securities and not tokens. The SEC chair said that very few tokens could be ranked as commodities. Such tokens were subject to the regulatory threshold of the Commodity Futures Trading Commission (CFTC).
“Bitcoin is a commodity token, and that could be a very large market value. But the SEC has jurisdiction over probably the best number of these tokens,” Gensler said. However, he added that all cryptocurrencies were speculative and highly volatile, and the lack of a comprehensive and clear regulatory framework left the public vulnerable.
“In 2016, there were an estimated 644 crypto tokens on the worldwide market. Five years later, that number had gone up more than tenfold. The volatility in the crypto markets in recent weeks highlights the risks to the investing public,” Gensler added.
Given the vast scope of the market, Gensler said that the SEC needed extra resources to strengthen the presence of the commission in the crypto space. Additional support was also needed for the Crypto Assets and Cyber Unit. The move will also assist in investigating the complaints and tips received from the public.
Gensler’s speech did not seem to go well, as it attracted criticism from some legislatures. Congressman Tom Emmer tweeted, “Gary Gensler, you put all of the SEC’s taxpayer funded resources into crypto crackdowns. Now, you don’t have the funds to do your actual job, so you’re coming to Congress for more? You’ve got to be kidding me.”
SEC’s tough stance on crypto
The SEC has held a tough stance regarding the cryptocurrency market. Gensler was appointed as the chair of the commission, and it created optimism that the former professor of blockchain at MIT would be lenient in regulating the space. However, Gensler’s stance on the crypto space has been tough since his appointment.
The SEC has failed to approve a spot Bitcoin exchange-traded fund (ETF) despite several applications for this product. Recently the SEC reportedly held a private meeting with Grayscale to discuss the approval of its spot Bitcoin ETF. Grayscale had earlier threatened to sue the SEC if its application was denied.
The SEC has also shown interest in regulating the decentralized finance (DeFi) sector. Gensler noted that many decentralized projects were not self-governing because there were individuals behind these projects that needed to be regulated to ensure compliance. The DeFi space has also expanded significantly over the past year.
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