Gary Gensler, the chairman of the SEC, said that there was no need for them to opt for different treatment of the crypto markets and it should be considered the same as other capital markets.
Gensler said that the securities regulator would function the same way as a cop on the beat and told crypto lending and trading platforms to engage with the SEC’s staff.
Gensler talks crypto regulation
On Friday, Gary Gensler, the Securities and Exchange Commission (SEC) chair, wrote an opinion piece that was published by the Wall Street Journal.
The chairman talked about the regulation of crypto assets and stated that crypto should be considered the same way as other capital markets.
He added that just because it uses a different technology does not mean that they should treat it any differently.
Gensler stated that the recent events in the crypto market had made it clear why it was necessary for crypto companies to comply with the securities law.
He stated that recent months had seen several crypto lending platforms freeze their users’ accounts and file for bankruptcy later. He said that the investors had had to go to court to get their funds after the bankruptcy.
According to the SEC, it does not matter what kind of financial product it is. It could be a decentralized finance (DeFi) platform, a crypto exchange, or even a lending platform.
Gensler stated that over decades, the Supreme Court has made it evident that it is not the labels, but the economic realities of a financial product that determine if it is classified as a security under securities law.
He also acknowledged that compliance with securities law comes with costs, but he said that this is no different than adding seat belts to cars. The SEC chairman said that a path can take them forward.
The chairman asked crypto lending and trading platforms to reach out to the SEC staff and emphasized that their compliance would benefit the crypto market and its investors.
He added that during this time, they would play the role of the cop because they have to ensure that there are investor protections in place in the crypto market.
Moreover, Gensler had also recently talked about what people can expect from the securities regulator in terms of crypto regulation.
He had received a great deal of criticism because the agency has been accused of opting for an enforcement-centric approach to regulating the crypto market.
The SEC boss has also stated that they regard bitcoin as a commodity, while most of the other crypto tokens available in the market have attributes that classify them as securities.
He also warned that a number of these crypto tokens would eventually fail. The debate over securities and commodities has been going on for a while.
It is this debate that prompted the SEC to file a lawsuit against Ripple Labs in December 2020, as it says that the XRP token is a security.