Gary Gensler Asks Securities and Exchange Commission Staff to Fine-Tune Cryptocurrency Compliance

    The chairman of the United States Securities and Exchange Commission (SEC), Gary Gensler, said that he has ordered SEC employees to fine-tune compliance for crypto tokens and intermediaries. He stressed that the overwhelming majority of cryptocurrency tokens are securities.

    Gary Gensler, Chairman of the Securities and Exchange Commission, on Crypto Regulation
    Gary Gensler, Chairman of the United States At the Practising Law Institute’s SEC Speaks conference on Thursday, the Securities and Exchange Commission (SEC) discussed crypto regulation and compliance.

    Noting that the SEC’s key principles apply to all securities markets, including securities and intermediaries in the cryptocurrency market, he stated: I think the great majority of the roughly 10,000 tokens in the crypto market are securities. Securities regulations apply to the offers and sales of these hundreds of crypto security tokens.

    According to Gensler, certain crypto tokens may not fit the definition of a security. “These presumably represent just a tiny number of tokens, but accounting for a considerable amount of the crypto market’s overall value,” he believes. For example, he previously said that bitcoin, the most valuable cryptocurrency by market capitalization, is a commodity governed by the Commodity Futures Trading Commission (CFTC).

    During his address on Thursday, SEC Chairman Jay Clayton defined bitcoin as follows:

    Some refer to Bitcoin, the first crypto asset, as “digital gold” because it trades like a precious metal, a speculative, rare but digital store of value.

    According to Gensler, some persons in the crypto business have advocated for more “advice” on crypto assets. He emphasised that the Commission “has spoken with a very distinct voice here over the previous five years: via the DAO Report, the Munchee Order, and dozens of Enforcement measures, all voted on by the Commission.”

    The SEC chairman emphasised the importance of investor safety, saying:

    I’ve encouraged the SEC staff to engage directly with entrepreneurs to register and regulate their tokens as securities, where appropriate.

    Despite the fact that “a handful of crypto security tokens have registered under the present framework,” he recognised that “it may be acceptable to be flexible in implementing existing disclosure criteria” given the nature of crypto investments.

    “I’ve instructed staff to engage with intermediaries to ensure they register each of their services — exchange, broker-dealer, custodial duties, and the like,” Gensler said of crypto intermediaries.

    “I look forward to engaging with crypto initiatives and intermediaries seeking to comply with the legislation,” he said. I also look forward to engaging with Congress on other legislative measures while keeping our present strong authority.”

    According to Gensler:

    I’ve requested staff to think about how we might use our regulatory tools to maybe fine-tune compliance for crypto security tokens and intermediates. On Friday, the SEC announced its intention to establish a specialised office to analyse crypto asset registrations.

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