$ 103,457.7
$ 2,369.42
$ 0.7886
$ 662.27
$ 171.89
Jan 12, 2022
SEC Chair Gensler Debates How Securities Laws Apply to Crypto Tokens
On CNBC on Monday, SEC Chair Gary Gensler highlighted cryptocurrency regulation and the agency's regulatory plan for 2022.
The chairman illuminated that, in general, “If you are raising money from the public, and the public is in anticipation of profit based upon that promoter, sponsor, that group’s efforts — that’s within the securities laws, and it’s within the securities laws because Congress painted with a broad brush.” He expounded:
“They want to protect you — the investing public — so that you have the proper information, or what’s called full and fair information, and protect you against fraud and scammers and the like.”
Investments labeled as a token, according to Gensler, ‘are still probably, perhaps a security.’
While new ways to invest, such as crypto tokens and Special Purpose Acquisition Companies (SPACs), are ‘interesting,’ the SEC chairman highlighted:
“Our role at the SEC is to ensure that the public still gets basic protection.”
Gensler further elucidated: “What is kind of old and really important is this basic idea that if you raise money from the public and the public is thinking about a profit, you have got to give them basic disclosures and everything.”
He was also questioned about the rise in cryptocurrency-based crowdfunding. He reiterated his refusal to comment on any specific project, the chairman detailed: “Crypto tokens, I will call them, are raising money from the public, and are they sharing with the public the same set of disclosures that helps the public decide and are they complying with our Truth in Advertising? Call it the Securities Act’s anti-fraud provisions.”
“There are thousands of these projects basically trying to raise money from the public so that they can back an entrepreneurial idea,” the SEC chairman labeled. While emphasizing that he supports innovation, Gensler noted that ‘it’s about bringing it into the securities laws.’ He opined:
Unfortunately, way too many of these are trying to say: ‘Well, we are not a security. We are just something else.’
“I think that the facts and circumstances suggest they are investment contracts, they are securities, and they should register,” Gensler concluded.
In an ongoing case with Ripple Labs and its management, he was also asked if ethereum is a security, given the SEC's view of XRP as a security.
Gensler, on the other hand, refused to say if ether is a security. He reiterated that he will not respond to any specific coin, the SEC boss said:
“I’m the chair of a five-member Commission that’s also a civil law enforcement agency. So, we don’t get involved in these types of public forums, talking about anyone project, one possible circumstance, and give legal advice over the airwaves that way.”
Disclaimer: The views and opinions expressed in this article are for informational purposes only and do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Prabhjeet Bhatla is a cryptocurrency writer covering startups and a researcher since 2020. She has authored many articles for Entrepreneur India and APAC (digital and print) on cryptocurrency and ever-evolving Blockchain, the technology behind Bitcoin, and other cryptocurrencies. She specializes in applied cryptography, privacy-enhanced information storage systems, anonymous cryptocurrencies, elliptic curve crypto-systems, and satellite television piracy.