According to SEC Chairman Gary Gensler, there is no reason to approach the cryptocurrency market any differently than traditional capital markets. Gensler urged cryptocurrency trading and lending platforms “to come in and talk to SEC officials,” noting that “the SEC will function as the cop on the beat.”
Gensler explained that current market developments highlight the need for cryptocurrency companies to adhere to securities rules. Some cryptocurrency lending platforms have either gone bankrupt or frozen the accounts of their investors in recent months. These investors have to stand in line at the court when it comes to bankruptcy
The SEC chairman noted that there is a way forward while admitting that compliance with securities regulations has expenses, much like adding safety belts to cars has cost.
“As with seat belts in cars, we need to ensure that investor protections come standard in the crypto market.”
No matter the type of financial product—whether it’s an app, cryptocurrency exchange, or a decentralised finance (DeFi) platform—the SEC chairman emphasised that everything must adhere to these standards.
Then Gensler emphasised once more that he invites cryptocurrency trading and lending platforms to visit and speak with SEC officials, stressing that doing so will help investors and the cryptocurrency economy.
“Across decades of cases, the Supreme Court has made clear that the economic realities of a product — not the labels — determine whether it is a security under the securities laws.”
The SEC chief has been previously criticized for trying to regulate the cryptocurrency market primarily through enforcement. Gensler added that while Bitcoin is a commodity, the majority of crypto tokens had characteristics of securities and foresaw a large number of them failing.